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PA Bulletin, Doc. No. 24-1792

NOTICES

DEPARTMENT OF REVENUE

Rates of Tax on Aviation Gasoline and Jet Fuel for 2025; Oil Company Franchise Tax Rate for 2025; Alternative Fuels Tax Rates for 2025

[54 Pa.B. 8205]
[Saturday, December 14, 2024]

I. Aviation Gasoline and Jet Fuels

 A. Aviation Gasoline Rate for 2025

 Under 74 Pa.C.S. § 6121(b) (relating to tax on aviation fuels), the Secretary of Revenue (Secretary) announces that for calendar year 2025 the rate of tax on aviation gasoline and all other liquid fuels used or sold and delivered by distributors within this Commonwealth for use as fuel in propeller-driven piston engine aircraft or aircraft engines will decrease from the rate of 6.0¢ per gallon to the rate of 5.7¢ per gallon or fractional part thereof.

 B. Jet Fuel Rate for 2025

 Under 74 Pa.C.S. § 6131(b) (relating to tax on jet fuels), the Secretary announces that for calendar year 2025 the rate of tax on jet fuels used or sold and delivered by distributors within this Commonwealth for use as fuel in turbine-propeller jet, turbojet and jet-driven aircraft and aircraft engines will decrease from the rate of 2.0¢ per gallon to the rate of 1.7¢ per gallon or fractional part thereof.

 C. Calculating the 2025 Aviation Gasoline and Jet Fuel Rates

 The rate of tax on aviation gasoline is adjusted annually beginning on January 1, 1985 and each January 1 thereafter.

 The rate of tax on jet fuels is adjusted annually beginning on January 1, 1986 and each January 1 there- after. Under 74 Pa.C.S. §§ 6121(b) and 6131(b) the rate of each tax increases or decreases 0.1¢ per gallon for each 10% increase or decrease in the producer price index for jet fuel as determined by the United States Department of Labor, Bureau of Labor Statistics, for the most recent 12-month period available as of November 1 each year subject to a maximum rate of 6.0¢ per gallon for aviation gasoline and 2.0¢ per gallon for jet fuels.

 On October 11, 2024, the most recently available 12-month period was September 2023 to September 2024, as reported in the Bureau of Labor Statistics, United States Department of Labor, Producer Price Indexes, September 2024, USDL-24-2103, released October 11, 2024, for which the percentage change was a decrease of 32.5%. Accordingly, the aviation gasoline tax rate will decrease from the rate of 6.0¢ per gallon to the rate of 5.7¢ per gallon or fractional part thereof; the jet fuel tax rate will decrease from the rate of 2.0¢ per gallon to the rate of 1.7¢ per gallon or fractional part thereof.

II. Oil Company Franchise Tax

 A. Transportation Funding Act of 2013

 Governor Corbett signed into law the act of November 25, 2013 (P.L. 974, No. 89) which amended 75 Pa.C.S. (relating to Vehicle Code) to both eliminate the inflationary cap on the Oil Company Franchise Tax and the fixed 12¢ per gallon Liquid Fuels and Fuels tax. Specifically, 75 Pa.C.S. § 9002 (relating to definitions) provides for the future removal of the cap and specific wholesale prices for use in the interim years.

 B. Calculating the 2025 Oil Company Franchise Tax Rate

 The rate of the oil company franchise tax imposed under 75 Pa.C.S. Chapter 95 (relating to taxes for high- way maintenance and construction), 75 Pa.C.S. § 9502 (relating to imposition of tax) and collected under 75 Pa.C.S. Chapter 90 (relating to Liquid Fuels and Fuels Tax Act), 75 Pa.C.S. § 9004(b) (relating to imposition of tax, exemptions and deductions), is determined annually by the Department of Revenue (Department) and announced by each December 15 for the following calendar year. The tax rate is determined on a ''cents per gallon equivalent basis,'' which is defined by 75 Pa.C.S. § 9002 as:

The average wholesale price per gallon multiplied by the decimal equivalent of any tax imposed by section 9502 (relating to imposition of tax), the product of which is rounded to the next highest tenth of a cent per gallon. The rate of tax shall be determined by the Department of Revenue on an annual basis beginning on every January 1 and shall be published as a notice in the Pennsylvania Bulletin no later than the preceding December 15. In the event of a change in the rate of tax imposed by section 9502, the Department shall redetermine the rate of tax as of the effective date of such change and give notice as soon as possible.

 ''Average wholesale price'' as used previously is defined by 75 Pa.C.S. § 9002 as:

The average wholesale price of all taxable liquid fuels and fuels, excluding the Federal excise tax and all liquid fuels taxes shall be as follows:
(1) After December 31, 2013, and before January 1, 2015, the average wholesale price shall be $1.87 per gallon.
(2) After December 31, 2014, and before January 1, 2017, the average wholesale price shall be $2.49 per gallon.
(3) After December 31, 2016, the average wholesale price shall be as determined by the Department of Revenue for the 12-month period ending on the September 30 immediately prior to January 1 of the year for which the rate is to be set. In no case shall the average wholesale price be less than $2.99 per gallon.

 For the 12-month period ending September 30, 2024, the Department has determined that the average wholesale price for all grades of gasoline and diesel fuel was $2.55 per gallon, therefore, the average wholesale price for 2025 is set at the floor of $2.99 per gallon.

 The oil company franchise tax imposed under 75 Pa.C.S. § 9502 is separated into two portions: mills per gallon not subject to discount (NSTD) and mills per gallon subject to discount (STD). The following table details the underlying calculations:


Composition of Oil Company Franchise Tax (OCFT)

OCFT Per Gallon NSTD

  Imposed By:Liquid Fuels Fuels
  75 Pa.C.S. § 9502(a)(1) 60.0 60.0
  75 Pa.C.S. § 9502(a)(2) 55.0 55.0
  75 Pa.C.S. § 9502(a)(3)38.538.5
  75 Pa.C.S. § 9502(a)(4)00.055.0
  _____________________________________
  NSTD Mills per Gallon: 153.5 208.5
  Decimal Equivalent: 0.15350.2085
  Average Wholesale Price:× $2.99    × $2.99   
  Product: 45.90¢ 62.34¢
  OCFT per Gallon, NSTD, rounded to next highest tenth per 75 Pa.C.S. § 9002: 45.9¢ 62.4¢

OCFT Per Gallon STD

  Imposed By:Liquid Fuels Fuels
  75 Pa.C.S. § 9502(a)(5) 39.0 39.0
  _____________________________________
  STD Mills per Gallon: 39.0 39.0
  Decimal Equivalent: 0.0390 0.0390
  Average Wholesale Price: × $2.99     × $2.99    
  Product: 11.66¢ 11.66¢
  OCFT per Gallon, STD, rounded to next highest tenth per 75 Pa.C.S. § 9002:11.7¢ 11.7¢
Total OCFT per Gallon, rounded to next highest tenth:
Liquid Fuels
Fuels
Total OCFT = NSTD + STD: 57.6¢ 74.1¢

 C. Imposition of Oil Company Franchise Tax on Liquid Fuels and Fuels

 The act of April 17, 1997 (P.L. 6, No. 3) provides that the oil company franchise tax as previously computed is imposed when liquid fuels or fuels are used or sold and delivered in this Commonwealth. Accordingly, the tax imposed upon the use or sale and delivery of 1 gallon of liquid fuels (primarily gasoline) shall remain at 57.6¢, and the tax imposed upon the use or sale and delivery of 1 gallon of fuels (primarily undyed diesel fuel) shall remain at 74.1¢.

III. Alternative Fuels Tax Rates for 2025

 Under 75 Pa.C.S. § 9004(d) the Secretary is required to compute the rate of tax applicable to each alternative fuel on a gallon-equivalent-basis. Under 75 Pa.C.S. § 9002 ''gallon-equivalent-basis'' is defined as the ''amount of any alternative fuel as determined by the Department to contain 114,500 BTU's.'' The amount determined on a''gallon-equivalent-basis'' for each alternative fuel is subject to the oil company franchise tax currently imposed on 1 gallon of gasoline. The rate of tax on 1 gallon of gasoline during the period of this notice is 57.6¢ which is equal to the Oil Company Franchise Tax.

 The 2025 tax rates for Compressed Natural Gas (CNG) and Hydrogen are calculated by utilizing the unit of measurement referred to as the gasoline gallon equivalent (GGE). A GGE is the amount of alternative fuel it takes to equal the energy content of one liquid gallon of gasoline.

 The 2025 tax rate for Liquefied Natural Gas (LNG) is calculated by utilizing the unit of measurement referred to as the diesel gallon equivalent (DGE). A DGE is the amount of alternative fuel it takes to equal the energy content of one liquid gallon of diesel.

 GGE and DGE are the most common forms of measurement for these products at the retail level. Measuring alternative fuels by GGE and DGE allows the consumer to make energy and cost comparisons with gasoline and diesel.

 The Secretary announces that the 2025 tax rates for alternative fuels are as follows:

Alternative
Fuel (Liquids)
Rate of Conversion
(BTU/Gal of
Alternative Fuel)		Tax Rate per Gallon
of Alternative Fuel)
Ethanol76,330 $0.384
Methanol57,250$0.289
Propane/LPG 84,250 $0.425
E-85 82,056 $0.413
M-8565,838$0.332
Electricity3,414 BTU/kWh $.0172/kWh
Alternative
Fuels under
GGE Formula
(Gaseous)		GGE Equivalent
to One Gallon
of Gasoline		Tax Rate
per GGE
CNG 1$0.576
Hydrogen 1 $0.576
Alternative Fuels under DGE Formula (1 DGE =1.7 gallons)DGE Equivalent
to One Gallon
of Diesel		Tax Rate
per DGE
LNG 1
$0.648

PATRICK BROWNE, 
Secretary

[Pa.B. Doc. No. 24-1792. Filed for public inspection December 13, 2024, 9:00 a.m.]


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