Bill would temporarily set North Carolina’s motor fuel tax to zero

North Carolina would suspend the motor fuel tax and set the rate at zero cents per gallon. The zero rate applies to North Carolina’s motor fuel excise tax. People who otherwise would have filed a fuel tax return must still file one. Pump prices must reflect the tax savings, except retailers need not lower prices for fuel taxed before the suspension began. Except for dyed diesel, motor fuel and alternative fuel would still count as taxed for specified sales-tax exemptions and violations involving untaxed fuel. The zero rate would begin the day after enactment and last through November 30, 2026. Officials would disregard that period when calculating the 2027 motor fuel tax rate.

State officials would transfer reserve money to replace motor fuel tax money that covered funds would otherwise receive. The transfers cover state funds supporting transportation, environmental cleanup and quality, wildlife, and waterways. Each transfer must equal the motor fuel tax distributions the covered funds would have received. The transferred money may be used only for each fund’s purposes under existing law. As soon as practical, the Revenue Secretary would report the replacement amounts monthly, and the State Controller would transfer them.

Revenue officials and designated enforcers would be barred from imposing the listed civil or criminal penalties. Protection covers people using dyed diesel for farming or agriculture in licensed or license-required highway vehicles, plus people who put or allow it into highway vehicle tanks. Farming and agricultural purposes include crop growing, livestock raising, forestry, aquaculture, and related agricultural businesses. The penalty pause would begin when the measure becomes law and last through December 31, 2026.

Certain certificate holders would owe no motor fuel tax for using dyed diesel in licensed highway vehicles. It covers people with Revenue Department exemption certificates as qualifying or conditional farmers, commercial loggers, commercial fishers, or wildlife managers. Covered users must still file the required fuel tax return. The Revenue Department, working with the Agriculture Department, must try to notify affected taxpayers, fuel sellers, and covered diesel users promptly after enactment. The tax exemption would cover qualifying dyed diesel use from October 1 through December 31, 2026.