Transportation Investment Act FAQs


Definitions:

Consumer Price Index for All Urban Consumers (CPI): The CPI is the index published monthly by the Bureau of Labor Statistics for the U.S. Department of Labor. The CPI is the U.S. city average of all items in a basket of consumer goods and services.

Motor Fuel: Motor fuel consists of gasoline, special fuel, clean burning fuel, aviation gasoline, and turbine fuel. Gasoline includes both gasoline and ethanol that is blended into gasoline. Special fuel consists of diesel fuel and kerosene, while clean burning fuel includes propane, Compressed Natural Gas (CNG), and Liquefied Natural Gas (LNG).


  1. What is the Transportation Infrassstructure Investment Act of 2013?
  2. What motor fuels are affected by this tax increase?
  3. How is the motor fuel tax increased?
  4. How will the CPI tax increase be computed?
  5. How does the average increase in the retail sales price of gasoline affect the tax increase?
  6. What are the percentage changes for the sales and use tax equivalent rate and dates the tax will change?
  7. Can I use my sales tax exemption with the sales and use tax equivalent rate?
  8. What is the inventory adjustment?

Transportation Investment Act Answers

  1. What is the Transportation Infrastructure Investment Act of 2013?

    The Transportation Infrastructure Investment Act of 2013 increases transportation funding, to the state's transportation trust fund, through various means including a motor fuel tax increase. Effective July 1, 2013, there will be additional motor fuel taxes on all motor fuels except aviation gasoline and turbine fuel. The additional taxes adjust for inflation using the CPI and also a percentage of the average retail price of gasoline. Other fees are also increased in this act but are not enforced by the Comptroller of Maryland.

  2. What motor fuels are affected by this tax increase?

    Gasoline, special fuels, and clean burning fuels are affected by this legislation. Aviation gasoline and turbine fuel will not be affected.

  3. How is the motor fuel tax increased?

    The motor fuel tax is increased using two methods:

    • the average percentage growth in the CPI, and
    • a percentage of the average retail price of gasoline, also known as the Sales and Use Tax Equivalent Rate.

  4. How will the CPI tax increase be computed?

    The CPI tax increase will be computed by the Comptroller’s Office. The percentage of growth will be determined by averaging the CPI for the 12 months preceding April 30th to the average index for the prior 12 months. This rate is multiplied by the current motor fuel tax rate to determine the increase in the motor fuel tax.

    This increase took effect July 1, 2013, and may increase each July 1st thereafter. However, the motor fuel tax increase cannot be greater than 8% of the motor fuel tax rate effective in the previous year. Also, if there is a decrease or no growth in the CPI, the motor fuel tax will remain the same.

  5. How does the average increase in the retail sales price of gasoline affect the tax increase?

    This is known as the sales and use tax equivalent rate increase. However, it is not a sales tax but an increase to the motor fuel tax.

    Again, this increase will be computed by the Comptroller’s Office. The Comptroller’s Office will determine the average annual retail price of regular unleaded gasoline, excluding federal and state taxes. The sales and use tax equivalent rate will be determined by multiplying the average annual retail price by the applicable percentage rate. This percentage varies each year until 2017 when it remains at 5%.

  6. What are the percentage changes for the sales and use tax equivalent rate and dates the tax will change?

    The percentage rate will change five (5) times within the next three (3) years when it will reach the full amount. The rate will be one percent (1%) starting on July 1, 2013, two percent (2%) on January 1, 2015, three percent (3%) on July 1, 2015, four percent (4%) on January 1, 2016, and five percent (5%) on July 1, 2016.

  7. Can I use my sales tax exemption with the sales and use tax equivalent rate?

    No, this is not a sales and use tax on motor fuel, but a motor fuel tax increase. If you have a valid motor fuel tax exemption that allows you to purchase tax-free motor fuel, you will still be allowed to purchase the motor fuel without the tax. Remember, if the fuel is used over the road (i.e. for a taxable purpose), you will be paying the current motor fuel tax with the increase.

  8. What is the inventory adjustment?

    The inventory adjustment is a floor tax on the remaining inventory in storage when there is a tax change. A physical inventory is compiled on the last day before the tax rate change, either due to a difference in the CPI and/or the sales and use tax equivalent rate. The taxpayer will report the inventory and tax due on Comptroller Form 779.