Maryland Gas Tax: Rates and Refund Process

Maryland levies an excise tax on motor fuels like gasoline and diesel. This tax is paid at the wholesale level, and the cost is passed on to consumers at the pump. The primary purpose of this tax is to provide a dedicated source of funding for the state’s transportation needs. The revenue collected is directed towards maintaining and improving the vast network of roads, bridges, and public transit systems.

Gas Tax Rates and Revenue Allocation

Maryland’s motor fuel tax rates are subject to adjustments. As of July 1, 2024, the tax on gasoline is 46.1 cents per gallon, and the rate for diesel fuel is 46.85 cents per gallon. These rates are not fixed; they are linked to the Consumer Price Index (CPI). Each year, the Comptroller of Maryland assesses the change in the CPI and adjusts the motor fuel tax rates for the upcoming fiscal year, with any increase capped at 8% of the previous year’s rate.

This system ensures that the purchasing power of the revenue keeps pace with rising costs of construction and maintenance. All revenue generated from the motor fuel tax is deposited into the state’s Transportation Trust Fund (TTF). The TTF provides a flexible and dedicated funding source for the Maryland Department of Transportation (MDOT).

Funds within the TTF are not earmarked for specific projects but are allocated based on a comprehensive plan. This revenue supports a wide range of transportation-related activities, including debt service, operational costs, and capital projects. Major uses of the fund include the maintenance of state highways and bridges, support for public transportation systems, and grants to local jurisdictions for their own road projects.

Eligibility for a Gas Tax Refund

Certain individuals, businesses, and organizations can claim a refund for the Maryland motor fuel tax they have paid. Eligibility is restricted to specific non-highway uses of the fuel. The principle is that the tax is intended to be paid by those who use the public highway system. Therefore, if the fuel is consumed for purposes that do not involve travel on public roads, a refund may be warranted.

Agricultural Use

Farmers are a significant category of eligible claimants. Fuel used for agricultural purposes, such as operating tractors, combines, and other farm machinery exclusively on private farmland, qualifies for a refund. To qualify, the claimant must be able to document that the fuel was used specifically for farming activities.

Off-Highway and Commercial Use

Another category for refunds is fuel consumed in vehicles and equipment operated entirely off-highway. This includes machinery used in construction, landscaping, and other commercial activities that take place on private property or designated work sites. Examples include bulldozers, generators, and other stationary engines. Fuel used in commercial boats for purposes like fishing also qualifies for a refund.

Government and Non-Profit Use

State and local government entities are eligible to claim a refund for the motor fuel tax paid on fuel used in their official vehicles. Certain non-profit organizations may also qualify, including non-profits that provide specialized transportation services like ambulance services or transportation for the elderly or individuals with disabilities. These organizations must provide documentation of their non-profit status and evidence that they receive funding from specific state agencies to be eligible.

Information and Documentation for a Refund Claim

Before submitting a claim, it is necessary to gather specific information and documentation. The state has stringent requirements for proving that the tax was paid and that the fuel was used for an eligible purpose. A complete and accurate submission is required for a successful refund claim.

Proof of purchase must be in the form of original, paid invoices or receipts, as photocopies are not accepted. Each invoice must clearly show the seller’s name and address, the date of the sale, the number of gallons purchased, and the type of fuel. The invoice must also show the amount of Maryland motor fuel tax that was charged. For fuel purchased from a retail service station, the receipt must be preprinted with the seller’s information.

The official application is the Comptroller of Maryland Form 706, “Maryland Motor Fuel Tax Refund Claim Form.” This form must be filled out completely and requires detailed information, including the claimant’s name, address, and federal employer identification number or Social Security number. It also requires a breakdown of fuel purchases by date, type, and gallons used for both taxable and non-taxable purposes.

In addition to the invoices and application form, some claimants may need to provide supplementary documents. For instance, first-time non-profit applicants may need to submit a copy of their charter or bylaws and a questionnaire detailing their vehicle fleet.

The Refund Application Process

Once all necessary documentation has been gathered and the application form is completed, the package can be submitted to the Comptroller of Maryland. The claim must be filed within one year from the date of the fuel purchase.

The completed Form 706, along with all required original invoices and other supporting documents, must be mailed to the specific address designated for motor fuel tax refunds. This mailing address is found on the application form or on the Comptroller’s website. Sending the package to the correct unit within the Revenue Administration Division helps avoid processing delays.

After the claim is submitted, it will be reviewed by the Motor Fuel Refund Unit, which can take several weeks. If the claim is approved, the refund is issued in the form of a state check mailed to the claimant. The claim is subject to audit, and if any discrepancies are found, the refund amount may be adjusted.