Get ready for a drop in tax at the gas pump Friday

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LINCOLN, Neb. (KLKN) – Nebraska drivers will see almost a five-cent instant savings at the pump on January 1. That’s because Nebraska’s gas tax is going down.

Formerly known as the “motor fuel tax”, the state Department of Revenue said the total tax will go from 33.2 cents a gallon to 28.7 cents a gallon.

At the start of 2020, the tax was 29.3 cents and it was hiked up in July. It was a pandemic-related increase, tied to travel restrictions, an extension of motor vehicle registrations, and fewer people traveling.

Here’s how the gas tax works. It’s calculated twice a year and it’s based on a trio of factors.

  • A fixed tax of 6.8 cents per gallon and 9.5 cents per gallon (effective January 2019);
  • Wholesale portion (8.5 cents per gallon for January 2021 through June 2021), based upon 5% of the average wholesale cost of fuel in the previous six-month period; and
  • Variable portion (3.9 cents per gallon for January 2021 through June 2021), which is determined by multiplying a variable percentage rate by the base cost of fuel purchased by the State of Nebraska.

This decrease is good through June when the tax can be changed again based on the same variety of factors.

 

 

Categories: Nebraska News, News