Motor fuel excise tax is a tax charged on each gallon of highway fuel. Someone in the supply chain collects it and passes it to the government, mostly to pay for roads.
This is a tax by the gallon, not a percentage of the price. It is built into the cost of gasoline and diesel meant for use on public roads. There is a federal layer and a separate state layer, and the rates differ from state to state.
It is usually collected high up the chain, often when fuel crosses the rack, the loading point at a terminal where trucks fill up. The party that owes it then builds it into the price and passes it down the line, so it rides on the fuel all the way to the pump.
For a seller it matters more than its size alone suggests, because on most loads the tax is larger than the seller’s own margin. Collecting it correctly, reporting it, and passing it on without error is a core part of staying both legal and profitable. A mistake on the tax can wipe out the slim profit on a load several times over.
In useOn a tanker load the motor fuel excise tax came to more than the jobber’s entire margin on the fuel, so getting it right was not optional.
See also Rack, Position holder, Dyed diesel