As the new year rang in, New Jersey motorists began paying more at the pump. A gas tax increase officially took effect Jan. 1, 2026.
Last month, the New Jersey Department of the Treasury announced the state gas tax would rise by 4.2 cents per gallon to support the Transportation Trust Fund. The move followed a review of fuel consumption data and consultation with the Legislative Budget and Finance officer.
A 2024 law (Chapter 7) mandates the increase. Under the measure, the state’s Highway Fuel Cap gradually rises through fiscal year 2029 to ensure stable funding for transportation and infrastructure. Additionally, the TTF program must provide nearly $11 billion over five years to support infrastructure improvements.
“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 State Treasurer Elizabeth Maher Muoio in a Dec. 1 press release. “We emphasize that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”
Final counts
The Fiscal Year 2026 Highway Fuel Cap is set at $2.115 billion, a 4.1% increase over the 2025 baseline. It will continue to rise annually, reaching $2.366 billion by FY 2029.
Under Chapter 7, the Petroleum Products Gross Receipts Tax adjusts each year to generate sufficient revenue to meet that cap. The mechanism accounts for changes in fuel consumption and any prior-year revenue shortfalls or surpluses.
As of Jan. 1, the PPGRT increased from 34.4 cents to 38.6 cents per gallon for gasoline. It rose from 38.4 cents to 42.6 cents for diesel fuel. When combined with the fixed Motor Fuels Tax, total fuel taxes now stand at 49.1 cents per gallon for gasoline and 56.1 cents for diesel.
Treasury officials noted that projected fuel consumption for FY 2026 is expected to be about 1% lower than the prior year, contributing to the need for a higher rate to meet statutory funding requirements.
According to GasBuddy, the average price per gallon here in New Jersey is $2.81 (as of Jan. 2).
