Motor Fuel Tax

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Oklahoma has relatively low gas taxes. The motor fuel tax is a selective sales tax that tries to match payment for a service –transportation–with the benefit of the service. Only four states tax motor fuel at a lower rate than Oklahoma’s 19 cents per gallon. The Oklahoma tax on gasoline is 16 cents per gallon below the national average reported by the American Petroleum Institute. This tax provided three percent of all tax revenue in the state in 2016. The tax is among the slowest-growing in Oklahoma, increasing just one percent per year.

Advantages of this tax include:

• there is a clear connection between tax and benefit since much of the tax is used for road construction and maintenance;
• the tax can encourage conservation, since it is on a per-gallon basis; and
• some of the tax is paid by non-residents who travel through or use goods transported through the state.

Disadvantages are:

• tax revenue falls when gas prices are increasing because people use less fuel;
• gasoline sales do not grow quickly due to improving vehicle efficiency and availability of other fuel sources; and
• the tax has not proven adequate to fund the maintenance of safe roads and bridges.

Oklahoma first levied a gas tax in 1933. Oklahoma levies excise taxes on gasoline and diesel at 19 cents per gallon. Rates were increased in 2018 (the first increase since 1987) from 16 cents per gallon of gasoline and 13 cents per gallon of diesel. An additional one-cent motor fuel assessment fee was repealed at the same time. 

Fuel used by governments and Indian tribes is exempt and farm users may have the tax refunded. Tribes may compact with the state to receive part of the fuel tax collections.

This tax is collected by wholesale fuel vendors and paid to the Oklahoma Tax Commission. The tax then is included in the price paid at the pump. Nearly two-thirds of the amount collected goes to the state transportation fund for appropriation to the Oklahoma Department of Transportation. About one-third goes to local governments for roads and bridges. Small amounts are restricted for other forms of transportation. None goes to the state’s General Revenue Fund. Unlike many states, Oklahoma local governments may not levy their own gas tax.

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