Texas drivers paying about $3.93 for a gallon of gas send the state the same 20 cents they have sent since 1991, and no one but the Legislature can change it. The AAA Texas average was $3.927 on Sept. 30, up from $2.73 a year earlier.
The tax has become a flashpoint as prices climb. Agriculture Commissioner Sid Miller has repeatedly asked Gov. Greg Abbott to suspend it, most recently after Abbott waived some diesel rules without touching the tax. Here is how it works.
The state motor fuels tax is 20 cents on every gallon of gasoline and diesel. It is charged per gallon, not as a percentage of the price, so a gallon carries the same 20 cents at $2.50 as at $4.50. The federal government adds 18.4 cents on a gallon of gasoline. Together that is 38.4 cents, about 10 percent of a $3.93 gallon.
The tax is not collected at the station though. Suppliers owe it when fuel leaves a terminal or is imported into Texas, and they send it to the Comptroller by the 25th of the following month, according to the Comptroller’s gasoline tax page. Suppliers who pay on time keep 2 percent. The cost is built into what stations pay for fuel, so drivers bear it at the pump even though suppliers write the check.
Texas first taxed gasoline in 1923 at 1 cent a gallon, then raised it to 3 cents in 1927, 4 cents in 1929 and 5 cents in 1955. It rose from 5 cents to 20 cents between 1984 and 1991, the years of the state’s oil bust, and has not moved since October 1991, according to the Comptroller’s Fiscal Notes. The rate is not tied to inflation.
Using Minneapolis Fed consumer price figures, 20 cents in 1991 equals about 49 cents today. The Comptroller’s 2019 Fiscal Notes reported 2016 testimony from the Texas A&M Transportation Institute that the 20 cents “now purchases less than 10 cents’ worth of construction.”
Texas’s rate is low by national standards. The Tax Foundation’s July 2026 rankings place it 45th among the states, tied with Oklahoma, in a list where California’s 73.64 cents is first. Arkansas charges 25 cents, Louisiana 20.93 cents and New Mexico 18.88 cents.
The Texas Constitution sends one-fourth of the net revenue to the Available School Fund, which helps pay for public schools. That is 5 of every 20 cents, TxDOT says. The rest goes to highway purposes: buying right-of-way, building, maintaining and policing roads, and administering traffic safety laws.
The tax raises about $3.8 billion a year, according to the Comptroller’s website as quoted by Texas County Progress. The Comptroller reported $342 million in August, down 6 percent from August 2025.
The gas tax is no longer the only large source of road money. Proposition 1, approved in 2014, sends part of oil and natural gas production taxes to the State Highway Fund, and Proposition 7, approved in 2015, sends part of sales tax revenue there. TxDOT’s funding brochure put Proposition 1 deposits at $1.46 billion in fiscal 2022 and an estimated $2.43 billion in fiscal 2023, and Proposition 7 sales tax transfers at about $2.5 billion a year. Drivers of electric vehicles, who pay no gas tax, have owed a $200 annual registration fee since Sept. 1, 2023.
Some buyers are exempt. Federal agencies, volunteer fire departments, nonprofit ambulance services, electric cooperatives and public school districts and their bus contractors do not pay, according to Texas County Progress, which notes that counties are not on the list.
Only the Legislature can suspend a law, under Article I, Section 28 of the Texas Constitution: “No power of suspending laws in this State shall be exercised except by the Legislature.” When Miller, Democratic gubernatorial nominee Gina Hinojosa and James Talarico asked Abbott in May to waive the tax, his press secretary, Eduardo Leal, said, “The state gas tax is levied on suppliers, not at the pump,” and that it generates “well over $300 million per month, which is constitutionally dedicated to fund roads and public schools,” Nexstar reported. Abbott’s late-September disaster proclamation allows dyed diesel on roads and heavier fuel, farm and timber loads, but his office said it does not waive the fuel tax, according to earlier Dispatch reporting.
Other states have moved. Georgia Gov. Brian Kemp suspended his state’s tax for 30 days starting Sept. 29, about 33 cents a gallon on gasoline. Indiana’s suspension is set to expire Oct. 5, and Utah cut its tax 15 percent through Dec. 31, Newsweek reported.
In Texas, the rate stays at 20 cents unless the Legislature acts, and its next regular session begins in January 2027.