Vehicle Registration & Gas Tax to Increase in Tennessee

By: Ryan Gallagher July 17, 2017
Roads throughout Tennessee are slated for upgrade under the IMPROVE Act, which increases registration fees and gas taxes to pay for them.
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The beginning of July brings with it renewed patriotism, a resurgence in barbecue use—and this year, higher prices for Tennessee drivers.

In late April, Governor Bill Haslam signed into law a roads bill, known as the IMPROVE Act. Effective July 1, the law increases state gas prices by a sum total of $0.06 and diesel fuel by $0.10 per gallon over 3 years. Prices initially increased by $0.04 per gallon in July; standard fuel will rise another penny in each of the next 2 years, while diesel will rise by $0.03 each year.

In addition to an increase at the pump, Tennessee drivers will also face higher registration fees. The bill raised registration fees for passenger cars by $5 and commercial vehicles by $10. Larger increases also included a $20 boost for freight motor vehicles and a new $100 fee for electric vehicles.

All funds earned from the IMPROVE Act will go toward completing a $10 billion stockpile of road projects. Currently, there are 962 projects to be finished in 95 counties.

“If the IMPROVE Act had not been passed, we could be talking 20, 30 years or even more before those projects would be done,” said Department of Transportation Spokesman Mark Nagi. “With the passage of the IMPROVE Act, we’re looking to have all of those projects either complete, under construction, or under contract within the next 13-14 years.”

Officials of the DOT and other government agencies spread the word about the changes before the bill became law.

“We want people to be prepared. We want people to understand this is a new law that’s been passed and we are the collection arm and we’re out there to do the most efficient and best job we can,” said Knox County Clerk Foster Arnett.

In exchange for the increase in driving costs, the new legislation will cut 1% of the Tennessee tax on groceries, dropping the levy from 5% to 4%.

While the bill had its supporters, opponents expressed concern.

“. . .Every year we’re going to get less and less money because fuel efficiency is going up, so I predict we’ll be back having this same discussion in five years,” State Representative Roger Kane (R-Knoxville) said.

This is the first gas tax increase for Tennesseans in about 30 years; however, the registration and gas prices are still cheaper compared to surrounding Southern states.

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