Reference Number: 
CTAS-1619

Description.  The gasoline tax is a privilege tax imposed on all gasoline, fuel alcohol (as defined in T.C.A. § 67-3-103) and substitutes therefor, imported into this state; the tax being levied when the product first comes to rest in this state, subject to certain exceptions that are found in Tennessee Code Annotated, Title 67, Chapter 3, Part 4. The tax is administered by the Department of Revenue.   

Rate: Twenty-four cents (24¢) per gallon, effective July 1, 2017, twenty-five cents (25¢) per gallon, effective July 1, 2018 and twenty-six cents (26¢) per gallon, effective July 1, 2019 .  T.C.A.§ 67-3-201.

Distribution.  The distribution formula for twenty cents (20¢) of the gasoline tax is as follows (some minor distributions have been omitted):

1.    Amount necessary (if any) to fund state debt through sinking fund account. T.C.A. §§ 67-3-901, 9-9-105.

2.    Nine cents (9¢) of the twenty cents (20¢) gasoline tax is distributed as follows:

a.    28.68 percent (less 2 percent of this amount for Department of Revenue administration expenses) to the county aid fund for county road purposes (prior to this distribution, the County Technical Assistance Service is allocated $28,250 per month), which is divided as follows:

(1)  50 percent is divided equally among the 95 counties;

(2)  25 percent is divided among the counties on the basis of population; and

(3)  25 percent is divided among the counties on the basis of geographical area. 

b.    14.38 percent (less one percent (1%) of this amount for Department of Revenue administration expenses) to the various municipalities and the municipal street aid fund according to population.

c.    Remainder (less 2 percent (2%) of this amount for Department of Revenue administration expenses) to the state highway fund. T.C.A. §§ 67-3-901, 54-4-103.

3.    Two cents (2¢) of the twenty cents (20¢) gasoline tax is distributed as stated in 2 above, except to receive its portion the county must appropriate funds for road purposes from local revenue sources in an amount not less than the average of the preceding five fiscal years (bond issues are excluded from calculation). If this amount is less than the five-year average, the state allocation will be decreased by the difference between the five-year average and the current amount appropriated from local sources. These funds must be used for resurfacing and upgrading county roads. T.C.A. § 67-3-901.  

4.    Three cents (3¢) of the twenty cents (20¢) gasoline tax is distributed as follows:

a.    Sixty-Six percent (66%) to the counties as other county aid funds are distributed (less 1 percent of this amount to the Department of Revenue for administration expenses), to be used for resurfacing and upgrading county roads.

b.    Thirty-three percent (33%) to the municipalities as other municipal aid funds are distributed (less 1 percent of this amount to the Department of Revenue for administration expenses). T.C.A. § 67-3-901.

However, one cent (1¢) of this three cents (3¢) is subject to the local contribution rule as specified in paragraph 3 above.  

5.    Six cents (6¢) is distributed to the state highway fund.

The revenue from the increases in gasoline tax passed in 2017 as part of the IMPROVE Act is distributed as follows:

1.  25.4 percent to counties per T.C.A. § 54-4-103;

2.  12.7 percent to cities per T.C.A. § 54-4-103; and

3.  61.9 percent to the state highway fund.