Connecticut’s tax on diesel fuel is set to decline by nearly 7% on July 1, the state Revenue Services Department announced earlier this month. The change results from an annual market-driven adjustment, which ties the tax to wholesale diesel prices.
The diesel tax rate has been adjusted automatically each year since 2008, when policymakers enacted a formula linking the tax to the wholesale cost of diesel fuel. The statute requires the commissioner of the Department of Revenue Services to post the new diesel tax rate every year prior to June 15.
This year, that formula calls for a 3.5 cent per gallon reduction to the tax, bringing the current 52.4-cent tax to 48.9 cents for the next year. The change represents a roughly 6.7% cut to a tax borne largely by the state’s trucking industry.
During previous summers, representatives of the trucking industry have argued that upward adjustments to the tax would contribute to inflationary prices faced by consumers.
This year’s tax cut in Connecticut compliments roughly $600 million in tax relief adopted by the state’s Democratic-controlled legislature in 2023, as well as an expansion to the Earned Income Tax Credit passed earlier this year.
However, tax relief in Connecticut comes as Republicans in Washington D.C. pursue economic policies like tariffs, which economists expect will drive up the price of goods bought by consumers across the nation.
On Wednesday, Federal Reserve Chair Jerome Powell said inflation would increase throughout the summer as a result of tariffs imposed by Republican President Donald Trump.
“Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer,” Powell said, according to Reuters. “We know that because that’s what businesses say. That’s what the data say from the past.”
