NC drivers to spend more on gas in 2023 under new tax rate

The new year means new tax rates. For North Carolina drivers, that will mean higher gas prices.

The state's gas tax will go up 2 cents, starting on Sunday, Jan.1.

It's a hard pill to swallow but just as gas prices are cooling off, the gas tax is going up.

“People sometimes buy gas several times a week so they will notice it,” said economist Mike Walden.

Starting Monday, the gas tax will rise from 38.5 cents to 40.5 cents. That money is North Carolina Department of Transportation's largest funding source for transportation projects.

The calculation takes into account population and inflation.

“Last year, there are some estimates that construction costs for transportation projects may have gone up 20 percent," Walden said. "We all needs roads to run our economy, and to get to our jobs and go to schools, etc. This is way that North Carolina tries to keep up.”

In 2022, North Carolina saw unleaded gas prices soar to $4.67 in June.

The average has fallen to $2.99 a gallon to close out the year.

“Now, this morning, it was 50 cents lower which is great," said Carla Bartollomeo. "I hope the trend continues.”

The 2-cent increase will mean an extra $15 to $20 a year for drivers who fill up a 15-gallon tank every week.

“As long as they use it to make highway construction better and make our roads better and safe that’s OK," said Richard Head. "Something has got to pay for that.”

With the shift to electric vehicles, the state will likely have to find a new model for funding transportation projects in the future.

For now, the more you drive, the more taxes you’ll pay.

“There’s a logic here in using a gas tax in the sense that it’s a lot like a user fee,” Walden said.

The news comes as the state income tax is going down. The current rate of nearly 5 percent will drop to 4.75 percent in 2023. The plan is to keep enacting cuts until the rate hits 3.99 percent in 2027.