TRENTON - After a thorough review of fuel consumption statistics and consultation with the Legislative Budget and Finance Officer, the Department of the Treasury announced that New Jersey’s gas tax rate will increase by 4.2 cents per gallon beginning on Jan. 1, 2026 to support the state’s Transportation Trust Fund program.
The increase is the result of the 2024 law that gradually raises the state’s Highway Fuel Cap from Fiscal Year 2025 through Fiscal Year 2029. The Fiscal Year 2026 Highway Fuel Cap is set by statute at exactly $2.115 billion, which is 4.1 percent higher than the previous baseline level of $2.032 billion, and will increase each fiscal year, reaching $2.366 billion in FY 2029.
“Due to the new statutory target, and because actual consumption has trended below last fiscal year’s levels, our analysis of the new formula dictates a 4.2 cent increase this coming January,” State Treasurer Elizabeth Maher Muoio said in a release. “We emphasize that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”
Under Chapter 7, New Jersey’s trust fund program is required to provide nearly $11 billion over five years to support critical infrastructure improvements to the state’s roadways and bridges. In order to ensure the state has the funds necessary to support these projects, the law dictates that the Petroleum Products Gross Receipt Tax rate must be adjusted accordingly to generate enough revenue to meet the statutory Highway Fuel Cap for that fiscal year.
What is generally called the “gas tax” or the “highway fuels tax” is actually two separate taxes on gasoline and diesel fuel – the Motor Fuels Tax and the PPGRT.
Under the formula explicitly outlined in Chapter 7, the PPGRT rate will increase on Jan. 1, 2026 from 34.4 cents to 38.6 cents for gasoline and from 38.4 cents to 42.6 cents for diesel fuel. When combined with the Motor Fuels Tax, which is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel, the total tax rates that motorists will pay for gasoline and diesel fuel will be 49.1 cents and 56.1 cents, respectively.
