NC fuel tax pause offers relief for drivers

Stein signs law suspending the 41-cent-per-gallon tax through Nov. 30, with additional relief for farmers

Rutherford County drivers could save $6.15 on a 15-gallon fill-up under a temporary suspension of North Carolina’s motor fuel excise tax, provided the full tax reduction reaches the pump.

Gov. Josh Stein signed House Bill 3, the Relief at the Pump Act, on Oct. 9 in Fairview. The suspension began Oct. 10 and runs through Nov. 30, covering gasoline, diesel and alternative fuels.

The legislation eliminates the state’s 41-cent-per-gallon motor fuel excise tax during that period. That represents potential savings of $8.20 on 20 gallons, based solely on the tax reduction. Actual pump prices also depend on fuel costs and other factors.

For Rutherford County residents commuting to work, taking children to school or traveling for Thanksgiving, the pause offers temporary relief on fuel purchases. It also covers diesel used by trucking companies and other businesses.

Lawmakers approved the measure Oct. 7 during a one-day special session. The House voted 111-1, while the Senate approved it 41-0.

Fuel sellers are directed to reflect the suspension in consumer prices. However, retailers are not required to immediately reduce prices on fuel for which the tax accrued before the suspension began. That exception means drivers may not see the entire reduction immediately as stations sell previously taxed inventory.

Stein welcomed the relief while calling for broader action on household expenses.

“I am signing this bill to keep more money in people’s wallets, but this temporary relief is just one step,” Stein said in a statement.

Republican lawmakers described the legislation as help for families and businesses facing higher fuel costs ahead of holiday travel.

The pause also affects a major source of transportation funding. Legislative fiscal analysts estimate it will reduce motor fuel tax revenue by $362.3 million. The legislation replaces that revenue through transfers from the state’s Stabilization and Inflation Reserve, preserving funding for the Highway Fund, Highway Trust Fund and other accounts that receive fuel tax proceeds.

Rutherford County farmers and agricultural businesses may also qualify for separate relief involving dyed diesel, generally used for off-road equipment.

Through Dec. 31, the state is waiving specified civil and criminal penalties for highway use of dyed diesel for farming or agricultural purposes in North Carolina. Covered activities include crop cultivation, livestock production, forestry, aquaculture and related agribusiness operations.

A separate provision exempts certain users holding Revenue Department exemption certificates from motor fuel excise tax on dyed diesel used in licensed highway vehicles from Oct. 1 through Dec. 31. Those users include qualifying and conditional farmers, commercial loggers, commercial fishermen and wildlife managers.

The Department of Revenue said the fuel inspection tax remains in effect, and existing sales and use tax rules remain unchanged. Businesses and motor carriers must continue filing required tax returns during the suspension.

The statewide fuel tax pause expires Nov. 30; the agricultural dyed-diesel provisions extend through the end of December.

More information is available in the North Carolina Department of Revenue’s guidance.