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South Dakota to Tax LNG and Other Fuels Used to Propel Motor Vehicles Not Otherwise Specifically Taxed in the Motor Fuel Tax Laws

Effective July 1, 2014 South Dakota will impose motor fuel excise tax on LNG (liquefied natural gas) and other fuels that are used to propel motor vehicles but not currently specifically included in the motor fuel tax laws.

LNG will be taxed at a rate of $0.14 per gallon when used or sold for use in a motor vehicle. The tax is collected and remitted by the LNG vendor who must be properly licensed within the State. The statute clarifies that LNG is not a special fuel and defines it as “natural gas that has been cooled to approximately -260 degrees Fahrenheit, and is therefore in a liquid state, for subsequent use as a motor vehicle fuel.” For these purposes 1.5536 gallons of liquid natural gas equals one volumetric gross gallon of gasoline.

Additionally, any solid, liquid, or gaseous fuel, or any combination thereof, that is not otherwise specifically taxed by the state’s current motor fuel tax regime and that is also consumed to propel a motor vehicle on the highways is subject to a tax imposed at the equivalent rate of $0.22 per 116,090 BTU of fuel energy, the equivalent energy of a gallon of gasoline. The tax is reported and remitted by the owner or operator of the vehicle.