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Gasoline taxes increased in several states on July 1, just ahead of Independence Day weekend and vacation season. Included in the gas tax hike are several states that already boast some of the highest gas prices in the country, including California and Washington.
The excise tax is a government-imposed charge to cover the cost of infrastructure projects, including highways and mass transit at the federal level, and at the state level, they cover things like road construction, according to the Urban Institute. These taxes are levied on gasoline, diesel and gasohol, with adjustments to state taxes typically made twice annually on Jan. 1 and July 1. While the state gas tax rate varies, the federal tax rate on gas is 18.4 cents per gallon, including an excise tax of 18.3 cents per gallon and a storage tank fee of 0.1 cents per gallon.
Several states raised gasoline taxes on Tuesday, including California, where Californians already pay the highest state gas tax nationally. The state raised its excise rate on gasoline 1.6 cents to 61.2 cents per gallon and diesel 1.2 cents to 46.6 cents per gallon.
Washington also raised its state tax on gasoline 6 cents to 55.4 cents from 49.4 cents, with the tax set to climb again in 2026, where it will be raised 2% to account for inflation. The Evergreen State also raised taxes on diesel, which rose 9 cents to 58.4 cents per gallon, with the tax on diesel scheduled to rise 3 cents in 2028, with yet another 2% bump through the year on gasoline and diesel to account for inflation.
The full list of states that have raised their state gas taxes is as follows:
Alabama: 1 cent, to 30 and 31 cents per gallon, respectively, on gasoline and diesel
Illinois: 1.3 cents on gasoline and diesel, to 48.3 cents per gallon and 55.8 cents per gallon, respectively
Minnesota: 3.3 cents to 31.8 cents per gallon on fuel
Mississippi: 3 cents to 21 cents per gallon on gasoline
Missouri: 2.5 cents per gallon on fuel
Nebraska: 1.4 cents to 31.8 cents per gallon on fuel
Rhode Island: 1 cent to 38 cents per gallon on fuel
Virginia: 0.9 cents on gasoline and diesel to 31.7 cents per gallon and 32.7 cents per gallon, respectively
In just two states, state tax rates are being lowered:
Connecticut: 3.5 cents to 48.9 cents per gallon on diesel
Kentucky: 1.4 cents on gasoline and diesel to 25 and 22 cents per gallon, respectively
For many American drivers, these tax hikes translate to higher transportation costs, especially for those who rely on gasoline- or diesel-powered vehicles. There are ways, however, to offset these increased expenses by leveraging rewards credit cards designed to provide savings on fuel purchases.
Credit Cards That Help Save on Gas
From cashback options to points that can be redeemed for travel, these cards can lend valuable assistance for saving money.
Read more: The Best Credit Cards For Gas Of 2025
- Chase Freedom Flex®*
- Annual fee: $0
- Rewards: 5% cash back on up to $1,500 in combined purchases in categories that rotate quarterly (requires activation), 5% cash back on travel purchased through Chase Travel℠, 3% cash back on dining and drugstores and 1% cash back on all other purchases
Why we like it: The Chase Freedom Flex®* offers generous cashback on gas purchases during certain promotional quarters with rotating categories. If gas is a category bonus in a quarter, the ability to earn 5% on up to $1,500 in gas can result in significant savings, especially if you’re a regular driver. Plus, it comes with a $0 annual fee and 0% intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% to 28.49% applies. Balance transfer fee of up to 5% (min. $5) of the amount of each transfer applies.
2. Blue Cash Preferred® Card from American Express
- Annual fee: $0 intro annual fee for the first year, then $95 (Terms apply, see rates & fees)
- Rewards: 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other eligible purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout
Why we like it: 3% cashback on gas at U.S. gas stations is a solid return on every fuel purchase. With a $0 intro annual fee for the first year, then $95 annual fee, it’s a strong contender for a go-to daily driver, with incentives on popular categories like select streaming services and U.S. supermarkets, making it a versatile card for day-to-day spending.
3. Citi Custom Cash® Card*
- Annual fee: $0
- Rewards: 5% cash back on purchases in a top eligible spend category up to the first $500 spent each billing cycle, 4% cash back on hotels, car rentals, and attractions booked through Citi Travel and 1% cash back on all other purchases
Why we like it: If gas is your highest expense, this card can help you save 5% on gas purchases each billing cycle, up to $500 in purchases.
4. Citi Strata Premier® Card
- Annual fee: $95
- Rewards: 10 points per dollar spent on hotels, car rentals and attractions booked on CitiTravel.com, 3 points per dollar on restaurants, supermarkets, gas & EV stations, air travel and other hotel purchases and 1 point per dollar on all other purchases
Why we like it: Our top pick for the best credit cards for gas purchases, thanks to its flexible rewards. We like that it’s not just a great gas card, but a good all-around option if you also spend in common categories like supermarkets, hotels, restaurants and air travel.
5. Wells Fargo Autograph® Card
- Annual fee: $0
- Rewards: 3 points per dollar at restaurants, travel, gas stations, transit, popular streaming services and phone plans, 1 point per dollar on other purchases
Why we like it: For a card that charges a $0 annual fee, there a solid earn rate across a number of popular categories, including gas. Plus, there’s an introductory APR that is great if you’re looking to make a big purchase when getting the card.
Bottom Line
With rising gas taxes hitting some consumers in 2025, it’s a great time to find ways to reduce costs at the pump. A rewards credit card that offers cashback or points on gas can cut down on your overall expenses by maximizing its rewards potential. Keep an eye on promotional categories, rotate your card usage and pair your credit card with loyalty programs to make the most of your gas-related expenses.
To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.