New Jersey’s gas tax is scheduled to rise by 2.6 cents on January 1st. • New Jersey Monitor

New Jersey’s gas tax will rise 2.6 cents on Jan. 1 because a new law raises revenue targets for funding the state’s transportation infrastructure, Treasury officials announced Monday.

This year’s annual increase will see New Jersey’s combined gasoline taxes rise from 42.3 cents to 44.9 cents per gallon, while total taxes on each gallon of diesel will rise from 49.3 cents to 51.9 cents.

“We are pleased that this targeted funding stream continues to provide billions of dollars across the state to address our critical transportation infrastructure needs,” said Treasurer Liz Muoio.

Revenue from New Jersey’s gas taxes goes into the state’s transportation trust fund, which finances infrastructure investments in roads, bridges and other projects.

The increases are largely due to a bill Gov. Phil Murphy signed it in March This reauthorized the trust fund’s guarantee authority and increased gas tax revenue targets by approximately 18% over five years. Those increases are expected to result in an annual increase in the levy of about 2 cents, according to lawmakers.

The law increases the gas taxes’ revenue target of approximately $2 billion by approximately $84 million in each year of implementation, and gas tax rates automatically adjust each year to meet these targets based on fuel demand. The tax revenue targets are expected to increase by $418 million over the entire five-year implementation period.

Gasoline tax rates increase when fuel consumption decreases, and they decrease when demand for gasoline or diesel increases. Officials forecast fuel demand would rise 0.6% in the current July-June fiscal year compared to the previous fiscal year.

New Jersey imposes two separate gas taxes. The fuel tax charges a fixed rate of 10.5 cents per gallon for gasoline and 13.5 cents per gallon for diesel.

The gross receipts tax on petroleum products is adjusted annually to meet sales targets. Prices per gallon will rise to 34.4 cents for gasoline and 38.4 cents for diesel on Jan. 1.