Motor Vehicle Fuel Tax

History - There has been a motor fuel tax in Nebraska since April 1, 1925. Since that time the proceeds from that tax have been committed to the construction, repair, and maintenance of roads and bridges in Nebraska. The tax generates more than $300 million annually.

Base - There are a number of different taxes imposed that constitute what most people call the gas tax. The motor fuel tax of 12.5% is a statutorily set rate that is divided between state, city and county road funds. It is a cents-per-gallon tax collected at the wholesale level, and levied on the consumer. The special fuels tax is on multi-purpose fuel, such as diesel or propane, and is levied at the retail level, where it is established that it will be used for transportation on the roads and highways of the state. It is also levied on a cents per gallon basis. The law provides for dyed diesel fuel to be sold for off-road purposes free from tax.

The variable excise tax portion of the gas tax is levied as a percent of the wholesale price. As of July 1, 2007, the rate was 14.5 cents per gallon. (NEB. REV. STAT. Sections 66-4,140 through 66-4,144.) The tax for aircraft and jet fuel is also assessed on a cents per gallon basis.

Exemptions and deductions

Exemptions are sales into another state, sales to the United States or its agencies or corporations, sales to Metropolitan Transit Authorities, and sales to a tribe member on the reservation. Also, wholesalers are allowed to deduct a commission of 5% of the first $5,000 of tax collected per month and 2.5% of amounts in excess of $5,000. For all fuel types, that is gasoline, diesel, and aircraft fuel, the commission costs $6.2 million annually. Use of undyed diesel for non-highway purposes allows the user to receive a refund of the diesel fuel tax paid. These refunds total about $7.3 million annually.

Rate - As mentioned before, the statutorily set motor fuel and special fuel rate is 12.5 cents per gallon. (NEB. REV. STAT. Section 66-489 and 66-4,105.) Gasoline blended with ethanol received a two-cent per gallon break from this tax through Dec. 31, 1992, but currently there is no preference given gasohol. The variable excise tax rate is currently 14.5 cents, but is set semi-annually by the Department of Roads at whatever rate is necessary to fund appropriations for state highways. As of July 1, 2006, the total per gallon motor fuel and special fuel tax rate was 27.1 cents. The rate for aircraft gasoline is 5 cents per gallon, and the rate for jet fuel is 3 cents per gallon.

The petroleum release remedial action fee is imposed upon the importer, refiner, or distributor who first sells, offers for sale, or uses petroleum in Nebraska. The fee is 0.9 cents per gallon on motor vehicle fuels, such as gasoline and gasohol, and 0.3 cents on all other petroleum products.

Revenue from the fee is placed in the Petroleum Release Remedial Action Cash Fund for purposes of paying claims for reimbursement of persons responsible for remedial actions on releases and for investigations and expenses of the Department of Environmental Quality.

With the enactment of LB 1065 in 2004, $1.5 million will be transferred annually from 2004 through 2011 from the Petroleum Release Remedial Action Fund to the Ethanol Production Incentive Fund to help pay for incentives to produce ethanol in the state.

Administration/Disposition - All motor fuels taxes are collected from distributors and administered by the Motor Fuel Division of the Nebraska Department of Revenue. The portion of the proceeds that is deposited in the Highway Trust Fund for distribution to the state, cities, and counties for use in building, repairing, and maintaining roads and bridges is distributed in the following manner:

10.5 Cents of motor fuel/ special fuel tax	Highway Trust Fund, where it is combined with proceeds from the sales tax on motor vehicles and distributed: 53.3 percent to the Highway Cash Fund for use on state highways, and 46.7 percent to the Highway Allocation Fund for distribution equally to counties and municipalities.
2 Cents of motor fuel/ special fuel tax	Highway Allocation Fund for distribution, half to the cities and half to the counties.
14.5 Cents variable excise tax	Highway Cash Fund for use for state highways.
_________________ 27.0 Cents Total Tax

The amount in the Highway Allocation Fund is distributed equally to municipalities and counties based on a formula.

The county distribution formula is based on seven weighted factors:

a) Rural population - 20%.
b) Total population - 10%.
c) Lineal feet of bridges 20 feet or more in length - 10%.
d) Rural motor vehicle registrations - 20%.
e) Total motor vehicle registrations - 10%.
f) Miles of county and township roads - 20%.
g) Value of farm products sold - 10%.

The municipal distribution formula is based on three weighted factors:

a) Population - 50%.
b) Vehicle registrations - 30%.
c) Lane miles - 20%.

As mentioned previously, those portions of the tax flowing to cities and counties are also required to be spent building, repairing, or maintaining city and county roads.

Motor Vehicle Registration Fees

Base and Rate - Registration fees are paid annually per vehicle, and the rate varies depending on the type of vehicle. For example, the registration fee for an automobile is $15, a motorcycle is $4.50 and commercial trucks are $18 to $1,140 depending on registered weight. The owner of the vehicle also pays $1.50 per registration for the Recreation Road Fund, $1.75 per registration to the Department of Motor Vehicles Cash Fund, $2.00 that is retained by counties for general purposes, and 50 cents to the Nebraska Emergency Medical Systems Operations Fund. Registration fees deposited in the Highway Trust Fund total about $75 million annually. (NEB. REV. STAT. Section 60-301 et. seq.)

When new license plates are issued, a per plate fee is charged to cover the cost of manufacturing plates and the five renewal tabs that may be issued over the life of the plate. The fee is not to exceed $3.50. (NEB. REV. STAT. Section 60-3,102.) Proceeds of this plate charge are deposited in the Highway Trust Fund to replace money transferred from the Trust Fund to manufacture the plates. Additional fees are shown below.

MOTOR VEHICLE REGISTRATION FEES
DEPOSITED IN THE HIGHWAY TRUST FUND

Automobiles	$15	Section 60-3,143
Taxis	$15	Section 60-3,154
Motorcycles	$6	Section 60-3,153
Recreational vehicles	$18 to $42	Section 60-3,151
Snowmobiles	$8	Section 60-3,210
Utility trailers	$1 per 1,000 pounds up to 9,000 pounds, over 9,000 lbs. Same as commercial trailers	Section 60-3,151
Buses	$35 to $210	Section 60-3,144
School Buses	$10	Section 60-3,144
Commercial trucks	$18 to $85, plus $25 per ton for each ton over 7, reduced 10% if used for hauling farm products	Section 60-3,147
Commercial trailers and semi-trailers	$1	Section 60-3,150
Farm trucks	$18 to $65, plus $10 for every ton over 20	Section 60-3,146
Message plates	$30	Section 60-3,119

Exemptions and deductions

Exempt from motor vehicle registration fees are motor vehicles used for off-road purposes, those owned by the United States Government, the state, municipalities, counties, and schools, or any authority engaged in public transportation, one vehicle used by a disabled veteran, those owned by Indians and registered by the tribal government, and vehicles owned by agricultural societies and educational, charitable, religious, and cemetery organizations that are property tax exempt. Farm trucks are granted preferential rates relative to commercial trucks registered for the same weight. This preference for farm trucks totals $25.8 million according to the 2004 Tax Expenditure Report.

Administration and Disposition - The county treasurers collect registration fees. Two dollars per registration are retained by the county as an issuance fee ($5 if the registrant is a non-resident), $1.75 is deposited in the Department of Motor Vehicles Cash Fund, $1.50 per registration is deposited in the Recreation Road Fund, and 50 cents to the Nebraska Emergency Medical System Operations Fund. The remaining proceeds are deposited in the Highway Trust Fund, where they are combined with gas tax receipts and sales taxes on motor vehicles. The Highway Trust Fund is for building, repairing, or maintaining roads and bridges. Fifty-three and one-third percent of the Highway Trust Fund goes to the Department of Roads for state highways and bridges, 23 1/3 percent for counties, and 23 1/3 percent for cities.