Drivers in Kentucky will soon be paying less tax at the gas pump, and while the savings will be relatively small on an individual basis, a state lawmaker says there will be big consequences on county road funding.
When the new fiscal year starts on July 1, 2025, Kentucky’s total gasoline taxes and fees will drop 1.4 cents per gallon, from 27.8 cents per gallon to 26.4 cents per gallon.
The automatic decrease is due to a decline in the average wholesale price (AWP) of gasoline. The gasoline excise tax is calculated annually as 9% of the AWP.
The bulk of Kentucky’s gas tax revenue goes to the state’s Road Fund.
Speaking to county officials at the KCJEA/KMCA Joint Summer Conference this week, Rep. John Blanton said the drop in the tax rate equates to millions of dollars in lost revenue.
“The means less money for us to put blacktop down,” Blanton said. “That means less money to do new road projects.”
Blanton is Chair of the House Transportation Committee.
“The 1.4 cent reduction is going to put us back to the funding level of 2015,” Blanton added. “Is anything the price that it was in 2015? No, it’s not.”
This marks the second year in a row that the gas tax has decreased substantially. The gas tax automatically decreased from 30.1 cents per gallon in FY24 to 27.8 cents per gallon in FY25.
Motor fuels tax revenue is distributed through a revenue sharing formula. Counties receive 18.3% of the gas tax to support county road construction and maintenance. County governments own and maintain half of Kentucky’s road miles and a third of all bridges in the state.
