Kentucky's motor fuels tax rate to drop by 4.3 cents per gallon on New Year's Day

Kentucky's tax on the sales of gasoline, diesel and ethanol fuels will drop by 4.3 cents per gallon on New Year's Day.

Transportation officials said Wednesday the lower tax rate would cost the state Road Fund about $129 million on an annualized basis. State Transportation Secretary Mike Hancock says a revenue loss of that magnitude is "crippling," meaning less money for road and bridge projects.

Continue Reading Below

The Transportation Cabinet says a $129 million revenue loss amounts to about 6 percent of Kentucky's highway program.

The lower tax rate reflects a decline in the calculated average wholesale price of motor fuels. The motor fuels tax is paid by those using highways and bridges. Its components include a variable excise tax and a supplemental user fee of 5 cents per gallon for gas.