TRENTON, N.J. — New Jersey’s gas tax will increase by 4.2 cents per gallon on Jan. 1, 2026, to support the state’s Transportation Trust Fund, the Department of the Treasury announced Tuesday.
The adjustment follows a review of fuel consumption data and consultation with the Legislative Budget and Finance Officer, as required under a 2024 law known as Chapter 7. The law gradually raises the state’s Highway Fuel Cap from Fiscal Year 2025 through Fiscal Year 2029. For Fiscal Year 2026, the cap is set at $2.115 billion — a 4.1% increase over the previous baseline of $2.032 billion — and will continue rising to $2.366 billion by FY 2029.
“Due to the new statutory target, and because actual consumption has trended below last fiscal year’s levels, our analysis of the new formula dictates a 4.2 cent increase this coming January,” State Treasurer Elizabeth Maher Muoio said. “We emphasize that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”
Under Chapter 7, the Transportation Trust Fund must generate nearly $11 billion over five years to maintain and improve New Jersey’s roadways and bridges. To meet that requirement, the state adjusts the Petroleum Products Gross Receipt Tax — or PPGRT — each year based on revenue collections and projected fuel consumption.
The state’s gas tax is made up of two components: the Motor Fuels Tax and the PPGRT. On Jan. 1, the PPGRT rate will increase from 34.4 cents to 38.6 cents per gallon for gasoline, and from 38.4 cents to 42.6 cents for diesel. When combined with the fixed Motor Fuels Tax — 10.5 cents for gasoline and 13.5 cents for diesel — the total tax motorists pay will rise to 49.1 cents per gallon for gasoline and 56.1 cents for diesel.
How the Formula Works
Chapter 7 mandates that the Treasurer meet annually with the Legislative Budget and Finance Officer to evaluate revenue collections from highway fuel consumption. The tax rate may be adjusted each year to correct for a prior fiscal year surplus or shortfall, and to ensure projected fuel sales will meet the current year’s Highway Fuel Cap.
For Fiscal Year 2026, the Highway Fuel Cap totals $2.139 billion — the $2.115 billion statutory cap plus a $23.8 million shortfall carried over from FY 2025.
Fuel consumption is expected to drop by about 1% compared with FY 2025. Treasury officials said the combination of a higher statutory cap and declining consumption requires a corresponding increase in the PPGRT rate to produce the revenue needed for infrastructure projects.
Supporting Statistics
Consumption of gasoline and diesel fuel in Fiscal Year 2026 is projected to be 1.0 percent below Fiscal Year 2025 levels. As a result, the Fiscal Year 2026 PPGRT rate will be higher than in Fiscal Year 2025 because of the increased Highway Fuel Cap and declining consumption.
The table below shows the annual combined Motor Fuels and Petroleum Products Gross Receipts Tax rates on gasoline since 2017, and the annual increases or decreases under the statutory formulas. There have been five rate increases, two rate decreases, and two years with no change since the annual rate adjustment calculation began. Changes to the Highway Fuels Cap, consumption behavior, and either shortfalls or surpluses in annual collections have all impacted the annual calculation. The most recent two years, Fiscal Year 2025 and Fiscal Year 2026, are under the revised statute, P.L.2024, Chapter 7.
