Alternative Fuel Tax

An excise tax rate of 9% of the average wholesale price on a per gallon basis applies to all gasoline and special fuels. Special fuels include diesel, natural gas, propane, ethanol, biodiesel, hydrogen, and any other combustible gases and liquids, excluding gasoline, used to propel motor vehicles. Additionally, a highway motor fuel tax of $0.02 per gallon applies to all special fuels. For taxation purposes, one gasoline gallon equivalent of compressed natural gas (CNG) is equal to 5.66 pounds (lbs.) or 126.67 cubic feet. One diesel gallon equivalent of liquefied natural gas (LNG) is equal to 6.06 lbs.

(Reference Kentucky Revised Statutes 138.210, 138.220, and 138.226 and Kentucky Administrative Regulations 103.43.330)