Washington State is set to implement a substantial increase in its motor fuel taxes, effective July 1, 2025, marking the first such rise in nine years. The gasoline tax will climb by 6 cents per gallon, pushing the state’s rate from 49.4 cents to 55.4 cents, making Washington’s state gas tax the third highest in the nation, behind California and Pennsylvania. This hike is a cornerstone of a new six-year, $3.2 billion transportation package recently passed by the Legislature and signed into law by Governor Bob Ferguson.

The primary impetus behind this legislative action is a projected $1 billion shortfall in the state's upcoming two-year transportation budget. This deficit is largely attributed to a confluence of factors, including inflation-driven surges in construction costs and a flattening of traditional gas tax receipts. The latter is a direct consequence of increasing adoption of electric vehicles (EVs) and improvements in the fuel efficiency of conventional internal combustion engine vehicles, which collectively reduce gasoline consumption and, consequently, tax revenue.

Senator Marko Liias (D-Edmonds), chair of the Senate Transportation Committee, emphasized the necessity of the increase, stating, "This will keep projects on track and ensure the promises we’ve made can be kept. As you drive around and see those orange cones, that’s where your money is at work." The new legislation also includes provisions for an annual 2% increase, approximately one cent per gallon, starting July 1, 2026, to account for future inflation.

Beyond gasoline, the state tax on diesel will see an initial 3-cent increase (totaling 9 cents) on July 1, reaching 58.4 cents per gallon, with an additional 3-cent rise two years later. These diesel tax increases will also be subject to a 2% annual boost starting July 1, 2028. Collectively, these fuel tax adjustments are projected to generate $1.4 billion from gasoline and $166 million from diesel over the next six years.

In addition to fuel taxes, the comprehensive transportation package introduces a range of other revenue-generating measures. These include increases in passenger vehicle weight fees, a rise in the added sales tax for vehicles from 0.3% to 0.5%, and new excise taxes on high-value vehicles (8% on sales above $100,000) and non-commercial aircraft (10% on sales above $500,000). A temporary increase in the rental car tax, from 5.9% to 11.9% before settling at 9.9% in 2027, and a hike in the tire disposal fee from $1 to $5 per tire, further diversify the funding stream. Washington State Ferries will also implement a 50-cent vessel replacement surcharge and a 3% credit card processing fee next year.

While the state collects these taxes from fuel distributors before they reach the pump, the ultimate impact on consumer prices will depend on how distributors and retailers pass on these increased costs. This policy shift underscores the evolving financial landscape for transportation infrastructure, necessitating new approaches as the energy transition reshapes traditional revenue models.