New Jersey’s Department of the Treasury announced that the state gas tax will increase by 4.2 cents per gallon starting January 1, 2026. The adjustment is intended to support the Transportation Trust Fund (TTF) program and follows requirements set out in a law passed in 2024.
The law, known as Chapter 7, 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—an increase of 4.1 percent over the previous baseline of $2.032 billion. The cap will continue to rise annually until it reaches $2.366 billion in Fiscal Year 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,” said Treasurer Muoio. “We emphasize that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”
Chapter 7 requires New Jersey’s TTF program to provide nearly $11 billion over five years for infrastructure improvements on roadways and bridges. To ensure these projects are funded, state law mandates an annual adjustment of the Petroleum Products Gross Receipt Tax (PPGRT) rate based on revenue needs.
The so-called “gas tax” or “highway fuels tax” consists of two separate taxes: the Motor Fuels Tax and the PPGRT. Starting January 1, 2026, under Chapter 7’s formula, the PPGRT rate will rise from 34.4 cents to 38.6 cents per gallon for gasoline and from 38.4 cents to 42.6 cents per gallon for diesel fuel. When combined with fixed Motor Fuels Taxes—10.5 cents for gasoline and 13.5 cents for diesel—the total tax paid at the pump will be 49.1 cents per gallon for gasoline and 56.1 cents for diesel.
Each year, a statutory formula determines whether and how much to adjust the PPGRT rate so that revenues meet that year’s Highway Fuel Cap requirement. The Treasurer is required to consult with the Legislative Budget and Finance Officer by November 15th each fiscal year to assess fuel consumption data and revenue collections—a process recently completed by Treasurer Muoio and Legislative Budget and Finance Officer Thomas Koenig.
Since annual rate adjustments began in 2017, there have been five increases, two decreases, and two years without change in combined Motor Fuels and PPGRT rates on gasoline; these changes reflect variations in consumption patterns, collection surpluses or shortfalls, and updates to statutory formulas under laws such as P.L.2024, Chapter 7.
