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Our state system depends on state and federal motor fuels tax revenue. Additional sources include driver and vehicle fees and a general fund transfer of sales tax revenues. City governments also maintain a network of roadways, transit systems, sidewalks, and paths that are supported by state, federal, and local taxes and fees.

The state is responsible for all modes of transportation. Our responsibilities include:

• Roadway maintenance and construction activities, like highway paving, bridge repairs, mowing, and traffic signalization

• Managing state and federal grants to public and private railroads, airports, and transit systems

• Operating the Carolinian and Piedmont passenger rail services

• Providing eight ferry routes that transport nearly 1 million vehicles and over 2 million people

• Supporting two deep water ports, one inland, and a Global TransPark

• The Division of Motor Vehicles oversees commercial and personal licensing and vehicle registration needs.

North Carolina’s transportation network has historically been underfunded. Current funding levels are not enough to maintain our roads based on national standards for maintenance schedules. This has led to a backlog of maintenance and construction projects. Congestion and travel times are worsening, serious crash rates are increasing, and inflationary pressures have reduced the number of projects that can be funded.

Additionally, North Carolinians report that they want more transportation options. Rural areas will especially benefit from expanded transit systems while urban enhancements can improve congestion and travel times.

Often referred to as the ‘gas tax,’ the motor fuel tax is the main source of roadway funding in North Carolina. The state charges a 40.4 cents tax on each gallon of motor fuel (gasoline and diesel) purchased and an additional quarter-cent per-gallon inspection fee. The law requires these revenues be used only for transportation purposes.

While this system has worked for years, vehicles are getting better gas mileage, and an increasing number of vehicles do not need gas at all. This is great for reducing harmful emissions, but it also means we have less funding to meet growing demands.

The amount you pay in fuel tax depends on your vehicle and driving habits. Click HERE to calculate how much you pay.

While the gas tax system has worked for years, vehicles are getting better gas mileage, and an increasing number of vehicles do not require any gas at all. As drivers pay less at the pump, there is less funding available for our aging transportation network. We need a funding model that can keep up with the demands of a growing population and an evolving economy.

The average driver travels 11,000 miles per year in a vehicle that travels 23 miles on each gallon of gas. This driver pays $190 in gas taxes annually. Electric vehicle (EV) owners pay nothing in state gas taxes, but they are assessed a $214.50 annual registration fee for electric vehicles. Plug-in hybrid vehicle (PHEV) owners pay a $107.25 annual registration fee for plug-in hybrid vehicles. The two fees were adjusted for inflation on July 1, 2024.

ZEVs are the combination of electric and plug-in hybrid vehicles. These vehicles tend to last longer than gas-powered vehicles and save money on gas and maintenance costs. ZEVs also help improve air quality because they don’t emit harmful pollutants.

To help accelerate these benefits, North Carolina Executive Order 246 sets targets for increasing ZEVs in North Carolina. These goals include reaching 1.25 million ZEVs registered by 2030 and increasing the sales of ZEVs so that 50% of in-state sales are zero-emission by 2030.