NJ gas tax 2027: Where the money goes and can it be stopped

I knew a story about rising costs would get a reaction.

I didn’t know it would get more than 1,000 comments on Facebook in one day.

You were funny, you were angry, and a lot of you asked good questions. So I went and got answers.

“Could? Want to bet?”

I said the gas tax “could” go up on Jan. 1. You weren’t buying it.

“Could? What planet are you on, because it isn’t this one,” Kevin wrote.

Fair. But I said “could” because the rate really can go either way. Treasury runs a formula every year, and in 2021 the gas tax dropped 8.3 cents a gallon, according to the state Treasury.

That said, I wouldn’t bet on a drop this year either.

“So much for affordability”

This was the biggest theme by far. Most of you aimed your frustration at Gov. Mikie Sherrill (D) and Democrats, who ran on making New Jersey affordable.

“I thought they were going to concentrate on affordability?” Karen asked.

“Making NJ more affordable by the minute,” Mike wrote.

Others pointed back to a Republican.

“Chris Christie’s gift that keeps giving,” Richard wrote.

Here’s the thing: both parties built this.

Who’s responsible for the formula?

In 2016, Gov. Chris Christie (R) and the Democratic-controlled Legislature agreed to raise the gas tax 23 cents a gallon. That same fall, voters approved Public Question 2, 54.5% to 45.5%, which locks all gas tax money into the Transportation Trust Fund, according to Ballotpedia.

“Y’all voted for it on the 2016 ballot question,” Rob reminded everyone.

Then a 2024 law, signed under Gov. Phil Murphy (D), raised the amount the gas tax has to bring in every year through 2029, according to the state Treasury.

“Where does all that money go?”

Michael summed up a lot of comments: “Over the years, we’ve been told that the casino money would cut our taxes … and that lottery money would basically eliminate our taxes, yet they keep going up every year.”

Here’s what I found:

Gas tax: Every cent goes to the Transportation Trust Fund for roads, bridges and transit. The state constitution requires it.
Lottery: Not roads. It goes to education and state institutions, like school nutrition, college aid and veterans’ homes, according to the NJ Lottery.

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Every gallon of gas in New Jersey includes 49.1 cents in state gas tax, no matter the price at the pump. | photo by EJ

“Gas prices hit records. Didn’t the state make a fortune?”

James asked one of the best questions in the thread: with gas prices so high, shouldn’t the state have collected record gas tax money?

No, and here’s why. New Jersey’s gas tax is charged per gallon, not as a percentage of the price. So $4 gas doesn’t bring in more tax than $3 gas.

It actually works the other way. When we buy fewer gallons, the formula raises the per-gallon rate to hit its target. Treasury pointed to lower consumption as one reason for this year’s 4.2-cent increase.

“What about the sales tax cut?”

A few of you remembered the 2016 deal included a sales tax cut, and some said it never happened.

It did. The sales tax dropped from 7% to 6.875% in 2017, then to 6.625% in 2018, and it’s still 6.625% today, according to the state Division of Taxation.

“Can’t she just suspend it?”

“If the Democrats were so concerned about affordable why don’t they suspend the gas tax for 6 months,” Matthew wrote.

The governor can’t do that alone. A pause would take a vote by the Legislature, Patch reported.

And Sherrill has said no to the idea. When President Trump floated a federal gas tax holiday in May, she called keeping New Jersey’s tax “strategic and thoughtful,” adding, “The gas tax is how we invest in infrastructure going forward.”

Ron offered another idea. He says that as a mayor, he pushed for a flexible gas tax “set to an index with a floor, and ceiling.” He says that right now, it would mean drivers pay less.

We’ll know where the gas tax lands by early December. I’ll update you then.