Expect to be paying more at the pump in 2025. The Minnesota Department of Revenue breaks down where the tax money goes, but the bottom line for anyone who drives a vehicle that runs on gas will be paying roughly 3 cents more a gallon. Here's the breakdown for the increase, from the Department of Revenue.

According to state law, the Minnesota Motor Fuel Tax will increase on January 1, 2025. The new combined rate will be $0.318, consisting of the $0.283 excise tax rate for gasoline and special fuel products, plus the $0.035 per gallon debt service surcharge. Alternative fuel rates will also be increased.

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The increase is the first gas tax increase since July of 2012 when it was set at .285 cents/gal. Minnesota first raised its gas tax back in 1975 from 7 to 9 cents, and there were steady increases up until 2012 when it was last set by the legislature.

So where does the money go?

According to a Minnesota Department of Transportation document the money goes towards the Trunk Highway fund, as well as the Highway User Tax Distribution Fund. These funds are used to pay for construction, buy right-of-ways, and or fund non-federal road projects.

How much money is collected a year?

In 2023, it was reported that the state collected "$873 million in gas taxes in 2023, down from $937 million in 2019."

Where does the tax increase put Minnesota compared to other states?

Even with the 3-cent hike coming to Minnesota motorists, the new rate of 31.8 cents a gallon, keeps the state right around the middle of the pack nationally. Here's where Minnesota compares to its neighbors in the Midwest. (*Reflects change coming on Jan 1 2025)

Minnesota - 28.8 (31.8*)

North Dakota - 23

South Dakota - 30

Iowa - 30

Wisconsin - 32.9

Is there a Federal gas tax too?

Yes, there is an 18.4 cent a gallon national tax on gas PLUS what each state adds.