SALEM, Ore. — Governor Tina Kotek is moving ahead with a plan to raise Oregon’s gas tax and payroll tax to help fund the Oregon Department of Transportation (ODOT) and prevent layoffs of hundreds of employees. A special legislative session begins August 29, coinciding with Labor Day weekend, when lawmakers will vote on the package.
The proposal includes a 6-cent increase in the state gas tax, bringing it to 46 cents per gallon, an increase in the payroll tax for transit, higher vehicle title and registration fees, and a road usage charge for electric vehicles starting in 2027, with hybrid and new EVs included in 2028.
A 6-cent bump may not sound like much, but it adds up. For a two-car household driving about 12,000 miles per vehicle each year at 25 miles per gallon, that’s roughly 960 gallons annually. The extra tax would cost around $58 per year.
The payroll tax could also rise from 0.2% to 0.4%. For a household earning $100,000 a year, that’s an additional $200 annually. Combined, these changes come to about $258 more out of pocket every year.
On top of that, Oregon drivers already pay into the state’s Clean Fuels Program, enacted in 2015 under Governor Kate Brown. The program requires fuel providers to cut the carbon intensity of their fuels or buy clean fuel credits. The costs get passed down to consumers at the pump. State data shows it added an average of about 9.8 cents per gallon for gasoline and 11.2 cents for diesel in 2023. It’s not listed on receipts or pump signage, but it’s there—a hidden cost that adds about $95 per year for the same household.
All of this comes on top of some of the highest fuel taxes in the country. Oregon’s state gas tax is 40 cents per gallon, plus the federal tax of 18.4 cents, with Portland adding 10 cents and Multnomah County another 3 cents.
Even without new increases, Oregon drivers pay some of the highest gas prices in America. The national average is currently $3.14 per gallon. Oregon sits at $3.98, about 84 cents higher, which consistently places the state among the top five most expensive in the nation, just behind California, Hawaii, and Washington.
For families, the difference is stark. At the national average, driving 960 gallons a year would cost about $3,014. In Oregon, the same fuel costs $3,821—an $807 premium just for living here. Add in the proposed gas tax hike ($58), the payroll tax increase ($200), and the Clean Fuels surcharge ($95), and the total burden rises by another $353. That puts Oregon families more than $1,100 above the national average.
With grocery bills, rent, utilities, and everyday essentials already climbing, another thousand dollars a year makes a real difference. For many households, it’s the equivalent of a month’s worth of groceries or several utility bills.
A public hearing is scheduled for August 25 at 3 p.m. in Hearing Room F at the State Capitol. Citizens can testify in person, remotely, or in writing. Lawmakers will then take up the plan during the special session on August 29. While Kotek’s office argues the tax hikes are necessary to keep ODOT functioning, critics warn that adding new costs at the pump and in paychecks risks pushing Oregon families even further behind at a time when the state already has some of the highest fuel prices in the nation.
Earlier this year, Governor Kotek also halted Oregon’s controversial freeway tolling plan on I-5 and I-205, citing public opposition and equity concerns, though tolling for the Interstate Bridge Replacement Project is still moving forward. Supporters of her current tax proposal argue that raising the gas and payroll tax is a fairer way to maintain roads without adding toll booths that hit commuters in Portland the hardest. Others believe it’s just another burden for families already paying some of the highest fuel costs in the nation. What do you think—are these new taxes justified, or should lawmakers be looking for other solutions?
