Mississippi to Hike Motor Fuel Taxes for First Time in 38 Years
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Mississippi Gov. Tate Reeves enacted legislation to implement rolling 3-cent annual hikes in gas and diesel excise taxes starting July 1 in a package of tax laws, including one eliminating state income tax.
While most local attention focused on the state income tax clause in House Bill 1 and its companion, Senate Bill 3095, Mississippi Trucking Association President Hal Miller III was tracking the likelihood of motor fuel excise tax increases.
“We were engaged from the beginning on the fuel tax increase. MTA has recognized for several years that additional infrastructure funding is needed in Mississippi,” Miller told Transport Topics. “Leadership in the Capitol has been good at looking for various ways to add funding through a variety of vehicles in the past. However, we knew an increase in the fuel excise tax was going to be a part of the long-term solution, as our fuel tax has not been increased since 1987, which has us as one of the lowest in the nation.”
Magnolia State Motor Fuel Rates Set to Rise
- Through June 30: 18 cents per gallon
- July 1, 2025, through June 30, 2026: 21 cents
- July 1, 2026, through June 30, 2027: 24 cents
- July 1, 2027,onward: 27 cents
The Mississippi Department of Revenue currently imposes an excise tax on undyed diesel, gasoline, ethanol, gasohol and undyed biodiesel of 18 cents per gallon through June 30. The motor fuel taxes are levied on licensed distributors and businesses that sell motor fuel.
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“After conversations with both legislative chambers, we asked that the increase level be reasonable, spent primarily on roads and bridges and be applied in a stair-step method over multiple years. That is what the end result was,” Miller explained. “We are very grateful for the leadership being aware of the importance of keeping our industry healthy while also providing much-needed funds to our roads and bridges.”
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The motor fuel tax hikes start July 1 on diesel, gas and the other special fuels with a 3-cent jump to 21 cents a gallon through June 30, 2026. Then another increase takes effect at 24 cents per gallon from July 1, 2026, to June 30, 2027. The third increase, to 27 cents a gallon, is to start July 1, 2027.
House Bill 1 was hailed as the “Build Up Mississippi Act” for Reeves’ legislation signing event March 27. “Let me say that again: Mississippi will no longer tax the work, the earnings or the ambition of its people. The legislation I’m signing today puts us in a rare class of elite, competitive states,” the governor said. “There are only a handful of states in the country that do not tax income. Today, Mississippi joins their ranks — and in doing so, we plant our flag.”
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Only Lt. Gov. Delbert Hosemann, who also spoke at the event, referred to the upcoming motor fuel taxes as a positive for generating infrastructure revenue. “This legislation eliminates the income tax, reduces the grocery tax, maintains our transportation system, and it ensures the solvency of the public employees retirement system,” Hosemann said.
Money from the increases will be mainly allocated to the state transportation department (74%), followed by 23.25% for the Office of State Aid Road Construction — which funds the state’s 82 counties in building and maintaining secondary, non-state-owned roads and bridges. The remaining 2.75% is for the Strategic Multi-Modal Investments Fund, created in 2023 to increase freight capacity and boost economic growth at Mississippi’s airports, ports and railroads.
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