MontanaHB 35169th Legislature, Regular Session (2025)HouseWALLET

Clarify point of taxation for gasoline and special fuels taxes

Sponsored By: Courtenay Sprunger (Republican)

Became Law

Taxation (Generally)Taxation--Fuels

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Bill Overview

Analyzed Economic Effects

9 provisions identified: 1 benefits, 4 costs, 4 mixed.

Where fuel tax money goes

Beginning July 1, 2026, gasoline tax revenue is split: 22 cents per gallon to the highway account, 4 cents to highway patrol, and the rest to local roads. For special fuel, 24.6 cents per gallon goes to the highway account, 4 cents to highway patrol, and the rest to local roads. This directs funding for highways, patrol, and local road work.

Drivers owe tax if none paid

If no Montana fuel tax was paid for fuel you used on public roads, the state collects the tax from you. The tax equals your gallons used times the per‑gallon gasoline or special fuel rate. This rule applies to vehicles on public roads starting July 1, 2026.

Penalties for dyed fuel on roads

You cannot use untaxed dyed special fuel on public roads. Exception: trucks over 12,000 lbs with a permanently affixed feed box used only to feed livestock, or other uses allowed by rule. First civil offense can be up to $1,000; second up to $5,000; later offenses are criminal. The vehicle operator owes any unpaid tax. Sellers are jointly liable if they knew the fuel would be used on roads. Rules take effect July 1, 2026.

Per-gallon fuel taxes set

Beginning July 1, 2026, Montana charges per‑gallon fuel taxes to distributors. Gasoline is $0.33 per gallon. Special fuel is $0.2975 per gallon. Aviation fuel is $0.05 per gallon. Fuel sold to the federal defense fuel supply center is excepted. The tax is imposed on distributors unless another distributor already paid it.

Fuel distributors licensed and bonded

You must get a distributor license before doing business in Montana. You must post security based on your estimated monthly tax; importers and exporters post at least $25,000. Only licensed distributors may withdraw fuel from Montana refineries or terminals; unlicensed fuel can be seized. The department can deny, revoke, or put licenses on probation for violations or unpaid taxes; you can appeal. Blenders of biodiesel or ethanol must be licensed or buy fuel with tax already paid. These rules start July 1, 2026.

Who owes fuel tax and when

Starting July 1, 2026, the law clarifies which party is the distributor for tax when fuel is withdrawn or imported. Fuel from a Montana refinery is distributed by the owner unless shipped to a licensed distributor named on the bill of lading. Imported fuel is distributed by the owner when brought to rest in Montana unless a licensed distributor makes the in‑state delivery. Only one tax‑free exchange between licensed distributors is allowed. Sales for export are excluded only if you are licensed and pay the destination state's tax; otherwise Montana may tax the sale.

Fuel tax rounding and calculations

Distributors may round their fuel tax to the nearest whole dollar starting July 1, 2026. If the state charges an owner or operator instead, the tax equals the per‑gallon rate times gallons used.

Fuel tax terms and farm rules clarified

The law updates many fuel tax definitions starting July 1, 2026. It clarifies who counts as a distributor, importer, exporter, and blender. It ties agricultural use to earning farm or ranch income and filing farm or income reports. It defines biodiesel, ethanol, ethanol‑blended gasoline, bulk delivery, cardlock systems, and more.

Most rules start July 1, 2026

The act takes effect July 1, 2026. Tax rates, licensing, enforcement, definitions, and revenue splits apply starting that date.

Sponsors & Cosponsors

Sponsor

Courtenay Sprunger
Republican • House

Cosponsors

Gregg Hunter
Republican • Senate
Josh Kassmier
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 295 • No: 0

House vote • 4/11/2025

Do Concur

Yes: 48 • No: 0

House vote • 4/10/2025

Do Concur

Yes: 48 • No: 0

House vote • 2/11/2025

Do Pass

Yes: 99 • No: 0

House vote • 2/10/2025