Natural Gas Fuel Tax Increase Becomes Law in Utah

Gov. Gary Herbert, R-Utah, has signed into law H.B.362, a comprehensive transportation funding package that includes a measure to increase the state tax on natural gas motor vehicle fuel.

The legislation, which also includes a hike in the state gasoline tax, recently passed in the Utah legislature and aims to pay for a projected shortfall in transportation funding. According to Herbert, the legislature last addressed transportation funding 17 years ago.

In a statement, the governor says, ‘A strong transportation infrastructure has played a critical role in our economic growth, and it will continue to do so thanks to this bill.”

H.B.271 will raise the state's current 8.5 cents per gallon equivalent tax on natural gas fuel by 2 cents annually over a four-year period. The natural gas measure was originally proposed in a separate bill, H.B.271, which first sought a higher tax increase but was later amended and added into H.B.362.

Notably, the transportation funding package also establishes a state fuel tax on hydrogen used to power a motor vehicle, beginning at 10.5 cents per gallon equivalent. Like the raised tax on natural gas, the rate on hydrogen fuel will increase by 2 cents per gallon equivalent annually.

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