MOTOR FUEL-CPI ADJUSTMENT

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3986

Introduced 2/6/2026, by Sen. Jason Plummer

SYNOPSIS AS INTRODUCED:

35 ILCS 505/2

from Ch. 120, par. 418

Amends the Motor Fuel Tax Law. Provides that the July 1, 2026 tax
increase based on the Consumer Price Index shall not occur. Effective
immediately.
LRB104 19617 HLH 33066 b

A BILL FOR

SB3986
LRB104 19617 HLH 33066 b
1

AN ACT concerning revenue.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Motor Fuel Tax Law is amended by changing
5
Section 2 as follows:

6

(35 ILCS 505/2)

(from Ch. 120, par. 418)
7

Sec. 2.
A tax is imposed on the privilege of operating
8
motor vehicles upon the public highways and recreational-type
9
watercraft upon the waters of this State.
10

(a) Prior to August 1, 1989, the tax is imposed at the rate
11
of 13 cents per gallon on all motor fuel used in motor vehicles
12
operating on the public highways and recreational type
13
watercraft operating upon the waters of this State. Beginning
14
on August 1, 1989 and until January 1, 1990, the rate of the
15
tax imposed in this paragraph shall be 16 cents per gallon.
16
Beginning January 1, 1990 and until July 1, 2019, the rate of
17
tax imposed in this paragraph, including the tax on compressed
18
natural gas, shall be 19 cents per gallon. Beginning July 1,
19
2019 and until July 1, 2020, the rate of tax imposed in this
20
paragraph shall be 38 cents per gallon. Beginning July 1, 2020
21
and until July 1, 2021, the rate of tax imposed in this
22
paragraph shall be 38.7 cents per gallon. Beginning July 1,
23
2021 and until January 1, 2023, the rate of tax imposed in this

SB3986
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LRB104 19617 HLH 33066 b
1
paragraph shall be 39.2 cents per gallon. On January 1, 2023,
2
the rate of tax imposed in this paragraph shall be increased by
3
an amount equal to the percentage increase, if any, in the
4
Consumer Price Index for the 12 months ending in September of
5
2022. On July 1, 2023, and on July 1 of each subsequent year,
6
the rate of tax imposed in this paragraph shall be increased by
7
an amount equal to the percentage increase, if any, in the
8
Consumer Price Index for the 12 months ending in March of the
9
year in which the increase takes place
, except that the July 1,
10
2026 increase in the rate of tax shall not occur
. The
11
percentage increase in the Consumer Price Index shall be
12
calculated as follows: (1) calculate the average Consumer
13
Price Index for the full 12 months ending in March of the year
14
in which the increase takes place; (2) calculate the average
15
Consumer Price Index for the full 12 months ending in March of
16
the year immediately preceding the year in which the increase
17
takes place; (3) calculate the percentage increase, if any, in
18
the current-year average determined under item (1) over the
19
preceding-year average determined under item (2). The rate
20
shall be rounded to the nearest one-tenth of one cent.
21

(a-5)
(Blank).

Beginning on July 1, 2022 and through
22
December 31, 2022, each retailer of motor fuel shall cause the
23
following notice to be posted in a prominently visible place
24
on each retail dispensing device that is used to dispense
25
motor fuel in the State of Illinois: "As of July 1, 2022, the
26
State of Illinois has suspended the inflation adjustment to

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LRB104 19617 HLH 33066 b
1
the motor fuel tax through December 31, 2022. The price on this
2
pump should reflect the suspension of the tax increase." The
3
notice shall be printed in bold print on a sign that is no
4
smaller than 4 inches by 8 inches. The sign shall be clearly
5
visible to customers. Any retailer who fails to post or
6
maintain a required sign through December 31, 2022 is guilty
7
of a petty offense for which the fine shall be $500 per day per
8
each retail premises where a violation occurs.

9

(b) Until July 1, 2019, the tax on the privilege of
10
operating motor vehicles which use diesel fuel, liquefied
11
natural gas, or propane shall be the rate according to
12
paragraph (a) plus an additional 2 1/2 cents per gallon.
13
Beginning July 1, 2019, the tax on the privilege of operating
14
motor vehicles which use diesel fuel, liquefied natural gas,
15
or propane shall be the rate according to subsection (a) plus
16
an additional 7.5 cents per gallon. "Diesel fuel" is defined
17
as any product intended for use or offered for sale as a fuel
18
for engines in which the fuel is injected into the combustion
19
chamber and ignited by pressure without electric spark.
20

(c) A tax is imposed upon the privilege of engaging in the
21
business of selling motor fuel as a retailer or reseller on all
22
motor fuel used in motor vehicles operating on the public
23
highways and recreational type watercraft operating upon the
24
waters of this State: (1) at the rate of 3 cents per gallon on
25
motor fuel owned or possessed by such retailer or reseller at
26
12:01 a.m. on August 1, 1989; and (2) at the rate of 3 cents

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LRB104 19617 HLH 33066 b
1
per gallon on motor fuel owned or possessed by such retailer or
2
reseller at 12:01 A.M. on January 1, 1990.
3

Retailers and resellers who are subject to this additional
4
tax shall be required to inventory such motor fuel and pay this
5
additional tax in a manner prescribed by the Department of
6
Revenue.
7

The tax imposed in this paragraph (c) shall be in addition
8
to all other taxes imposed by the State of Illinois or any unit
9
of local government in this State.
10

(d) Except as provided in Section 2a, the collection of a
11
tax based on gallonage of gasoline used for the propulsion of
12
any aircraft is prohibited on and after October 1, 1979, and
13
the collection of a tax based on gallonage of special fuel used
14
for the propulsion of any aircraft is prohibited on and after
15
December 1, 2019.
16

(e) The collection of a tax, based on gallonage of all
17
products commonly or commercially known or sold as 1-K
18
kerosene, regardless of its classification or uses, is
19
prohibited (i) on and after July 1, 1992 until December 31,
20
1999, except when the 1-K kerosene is either: (1) delivered
21
into bulk storage facilities of a bulk user, or (2) delivered
22
directly into the fuel supply tanks of motor vehicles and (ii)
23
on and after January 1, 2000. Beginning on January 1, 2000, the
24
collection of a tax, based on gallonage of all products
25
commonly or commercially known or sold as 1-K kerosene,
26
regardless of its classification or uses, is prohibited except

SB3986
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LRB104 19617 HLH 33066 b
1
when the 1-K kerosene is delivered directly into a storage
2
tank that is located at a facility that has withdrawal
3
facilities that are readily accessible to and are capable of
4
dispensing 1-K kerosene into the fuel supply tanks of motor
5
vehicles. For purposes of this subsection (e), a facility is
6
considered to have withdrawal facilities that are not "readily
7
accessible to and capable of dispensing 1-K kerosene into the
8
fuel supply tanks of motor vehicles" only if the 1-K kerosene
9
is delivered from: (i) a dispenser hose that is short enough so
10
that it will not reach the fuel supply tank of a motor vehicle
11
or (ii) a dispenser that is enclosed by a fence or other
12
physical barrier so that a vehicle cannot pull alongside the
13
dispenser to permit fueling.
14

Any person who sells or uses 1-K kerosene for use in motor
15
vehicles upon which the tax imposed by this Law has not been
16
paid shall be liable for any tax due on the sales or use of 1-K
17
kerosene.
18

As used in this Section, "Consumer Price Index" means the
19
index published by the Bureau of Labor Statistics of the
20
United States Department of Labor that measures the average
21
change in prices of goods and services purchased by all urban
22
consumers, United States city average, all items, 1982-84 =
23
100.
24
(Source: P.A. 102-700, eff. 4-19-22; 103-995, eff. 8-9-24.)

25

Section 99.
Effective date.
This Act takes effect upon
26
becoming law.

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