Local Government Motor Fuel Taxes

Rebuild Illinois also adds provisions that allow local governments to generate their own transportation revenues. Specifically, new counties and municipalities can now adopt a local motor fuel tax (MFT).

COUNTY MFT

Lake and Will Counties are now permitted to adopt a county motor fuel tax at a rate between $0.04 and $0.08 per gallon; if adopted, these rates would be tied to inflation. By July 1 each year, the Illinois Department of revenue will publish the new rates, which will be calculated equal to a percentage increase in the Consumer Price Index. The following table estimates annual revenues if a $0.08 rate is adopted. In December 2019, Will County adopted a local MFT rate of $0.04 per gallon.

Estimated Revenues from Implementing New County MFT
NOTE: these revenue estimates were calculated assuming a year with typical travel habits; the COVID-19 pandemic is expected to impact motor fuel tax revenues as summarized in this ILEPI report.

Sources: IDOT Travel Statistics, 2019 (annual VMT); Energy Information Administration, 2018 (fuel efficiency)

DuPage, Kane, and McHenry Counties – which already had county MFTs of $0.04 per gallon – are also permitted to increase their rates up to $0.08 per gallon; additionally, county MFT rates will be tied to inflation. By July 1 each year, the Illinois Department of Revenue will publish the new rates, which will be calculated equal to a percentage increase in the Consumer Price Index. The following table estimates new annual revenues if a $0.08 rate is adopted.

Estimated Revenues from Increasing Existing County MFT
NOTE: these revenue estimates were calculated assuming a year with typical travel habits; the COVID-19 pandemic is expected to impact motor fuel tax revenues as summarized in this ILEPI report.

Sources: IL Department of Revenue (FY19 revenues, all counties except Cook); Cook County CAFR (Cook County revenues)

MUNICIPALITY MFT

Rebuild Illinois authorizes all municipalities within Cook County to adopt a local motor fuel tax (MFT) at a rate no higher than $0.03 per gallon.

While this does open opportunities for certain municipalities, home rule municipalities already had the ability to adopt a local MFT at any desired rate. Municipalities automatically have home rule powers when reaching a population of 25,001, as outlined in the Illinois Constitution. Small municipalities can achieve home rule status by a majority vote of their citizens on a local referendum. Conversely, municipalities over 25,000 can choose to not have home rule status by local referendum.