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Suspension on Illinois Gas Tax Hike Set to End Jan 1 – NBC Chicago

You can expect to pay more at the gas pump starting Jan 1 in Illinois.

That’s because a suspension on the inflation-related gas tax increase that was supposed to take effect earlier this year will come to an end in the new year — and another hike could soon follow.

Under the state’s budget, a 2.2 cent-per-gallon tax increase that was scheduled to take effect on July 1, 2022, was suspended as part of a larger effort to provide relief to taxpayers impacted by wildly-escalating inflation rates.

The election-year move was expected to save Illinois taxpayers approximately $70 million.

Unlike the grocery tax suspension, which was put into effect for an entire year, the gas tax suspension was only slated to last six months, meaning that on Jan. 1, motorists will see their tax bills go up.

The increase is tied to the percentage by which the Department of Labor’s Consumer Price Index for All Urban Consumers (CPI) increased over a 12-month period ending on Sept. 1, according to terms of the state’s budget. That number turned out to be 8.2%, according to the Bureau of Labor Statistics.

As a result, Illinois motorists will see a fuel tax increase of roughly 3.2 cents per gallon for gasoline in the new year, bringing the state’s total fuel tax on gasoline to 42.4 cents per gallon.

That may not be the only tax increase motorists see in the coming year, however. According to the legislation, another inflation-based tax increase could also occur on July 1, though it would be anticipated that the increase would be smaller given that it would occur over a shorter time frame, and that inflation at the national level is finally showing signs of slowing.

As of Dec 27, AAA reports that the average price of a gallon of fuel in Illinois had dropped to $3,213. In Cook County, gas costs $3,476 per gallon, while in Kane, DuPage and Lake counties, fuel costs less than the statewide average.

Prior to 2019’s Rebuild Illinois infrastructure plan, the state’s gas tax had been locked in at 19 cents per gallon since 2000.

Following passage of that law, the state’s gas tax doubled to 38 cents, and was indexed to inflation every year on July 1.

Under a state law passed in 2016, those taxes are collected and can only be used on transportation infrastructure and operations.

In addition to the state’s fuel tax, the federal government also imposes a federal excise tax of 18.4 cents per gallon on gasoline. Motorists also have to pay state sales taxes on gasoline, with a base rate of 6.25%.

According to the Illinois CPA Society, Illinois residents spend 78 cents per gallon on taxes, the second-highest rate in the country.

In comparison, Indiana’s state gasoline taxes will drop by about 3 cents per gallon next month to their lowest level since April. A total of 52.9 cents per gallon in state taxes will be charged during January under rate changes released last week by the Indiana Department of Revenue. That is down 9.5 cents from August’s record-high tax rate, a fluctuation that comes as Indiana’s 7% sales tax on gasoline is calculated monthly along with a set tax directed to road projects.

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