North Carolina eyes gas tax relief with midterms looming
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North Carolina government leaders are turning their attention to gas taxes as they search for ways to give consumers relief from months of war in Iran.
Why it matters: Fuel costs are high on voters' lists of affordability concerns heading into the November midterm elections, but less money from gas taxes could affect state roads.
By the numbers: Gas prices are higher in the U.S. than they've ever been this time of year, according to a AAA analysis.
- Regular gas averaged $4.03 in North Carolina on Monday. Diesel fuel averaged $6.01.
State of play: General Assembly leaders said Saturday that they're working on legislation and plan to call a special session.
- And Gov. Josh Stein said last week that North Carolina would allow broader use of an untaxed diesel fuel typically reserved for farms. The fuel is dyed red to show it's not (usually) allowed on roads.
What they're saying: "Anything that anybody can do will help to some degree," said Wilson farmer Pender Sharp. "We never anticipated fuel being as high as it is now. Same thing for the people hauling products."
- Sharp buys untaxed red-dyed diesel by the truckload for his farm's tractors and harvest equipment. Last week, it cost $44,000 when a year ago it was $18,000, he tells Axios.
- Diesel hit record prices last month, and Farm Bureau projects U.S. fuel costs will be 29% more than last year.
- "The real solutions come in federal policy — on the war and fuel costs and the exorbitant profits that Chevron and Exxon are making," Sharp says. "But I appreciate everybody that is putting thought and action into trying to relieve the pain a little bit on farms and in the trucking industry."
Zoom in: North Carolina fuel taxes total 41 cents per gallon. That figure is adjusted annually using a complicated formula that takes into account population growth and the Consumer Price Index.
Zoom out: Federal taxes are 18 cents per gallon on gasoline and 24 cents per gallon on diesel.
- They have never before been suspended, according to congressional research.
- A handful of states, including Georgia and Ohio, have paused or lowered gas taxes in 2026. Georgia has done so three times now.
Friction point: There are concerns on both the left and right.
- "I think it's a gimmick. It's too little, too late," says Alexandra Forter Sirota, executive director of the nonpartisan N.C. Budget & Tax Center, which typically advocates for left-leaning policy. "When we don't have the funding from [the gas tax], lawmakers are likely going to have to tap into funding that should be going to education and health care and other priorities."
- "Any temporary suspension of the motor fuels tax should be structured to protect transportation funding," Donald Bryson, CEO of the conservative John Locke Foundation, said in an emailed statement. "North Carolina has long relied heavily on user fees to fund its roads, and the gas tax remains a substantial part of that system."
Context: Gas taxes pay for road construction, maintenance and planning. The state road network includes over 80,000 miles of highways, interstates and secondary roads.
- The state Department of Transportation received $2.6 billion from fuel taxes in the 2024-25 fiscal year, nearly a third of its revenue.
What's next: Draft legislation is expected to be unveiled ahead of a special session at noon Wednesday.