States Eye Retail Delivery Fees to Address Gas Tax Erosion

As many as 12 states are considering levies on the surging volume of packages delivered to consumers’ doorsteps—a potentially potent new revenue source aimed at offsetting declining gas tax collections.

The proposed fees come as consumers opt for the convenience and efficiency offered by online shopping companies capable of quickly delivering restaurant meals, groceries, gifts and household staples. Business groups backed by delivery companies such as Amazon and DoorDash have launched a social media campaign rallying their customers against what the companies call a “doorstep tax.”

Colorado and Minnesota pioneered per-package fees on most home delivery transactions in 2022 and 2024, respectively. Now the idea is catching on in Maryland and several other states as lawmakers search for new revenue streams to maintain their roads, bridges, and tunnels.

Maryland Gov. Wes Moore (D) proposed a 75-cent fee on retail deliveries as part of his 2026 budget. The proposal is expected to generate $225 million.

“Like many states we’re struggling because the gas tax is a declining revenue source,” said Eric Luedtke, a senior policy adviser to Moore. “We have to look at alternatives and this seems a logical nexus. It makes sense that the companies that are putting so much more wear and tear on our neighborhood streets would have to pony up a little more.”

The website www.nodoorsteptax.com, launched by the tech industry-funded Chamber of Progress, contends state-imposed delivery fees punish working families, disabled consumers and people living in food deserts. The group includes Amazon, Google, DoorDash, Grubhub, and Instacart among its 34 corporate partners.

“What we have seen in Colorado and Minnesota is these fees are inherently regressive,” said Ruth Whittaker, the group’s director of civic innovation policy. “There isn’t a good understanding among lawmakers about the impact of the fees, particularly for people who depend on delivery services because it is difficult for them to shop in person.”

Bills have already been introduced this year in Hawaii, which is considering a 50-cent delivery fee, and Mississippi, which is considering a 30-cent fee. A transportation funding bill in Indiana would grant local governments authority to impose a “county option retail delivery fee” on retail transactions.

Whittaker expects proposals in eight additional states that have previously explored the issue, including Illinois, Massachusetts, Nebraska, New York, Oregon, Pennsylvania, Washington, and Wisconsin.

Gas Tax Erosion

States have seen their motor fuel tax revenue erode for more than a decade, creating gaps in their transportation infrastructure budgets. The downward trend is expected to continue are car fuel efficiency improves, more drivers opt for electric vehicles, and younger people drive less less, according to the National Conference of State Legislatures.

Meanwhile, the bill for building and repairing state roads continues to climb. NCSL found 31 states and Washington, DC, boosted their fuel taxes since 2013. Despite these increases, “gas tax revenues are not keeping up with the transportation funding needs of the state,” NCSL said.

Colorado was the first state to respond to these trends three years ago, imposing a fee on deliveries of tangible property subject to the sales tax. The fee is currently 29 cents, but Colorado’s law allows for an inflationary adjustment each year.

Minnesota started collecting a 50-cent fee on all retail delivery transactions that equal or exceed $100 starting on July 1, 2024. The law waives the fee on deliveries of food and products generally exempt under the sales tax code, except clothing.

The fees are controversial. Retailers and tax consultants complained Colorado’s law and administrative rules were complex and possibly unconstitutional. The legislature responded with an overhaul law creating a small-seller exemption and allowing sellers to pay the fee for consumers. Full repeal of the Colorado fee could be on the horizon under a draft proposal asking for a referendum vote in 2026. A legislative hearing on the proposed repeal vote is scheduled for Feb. 10.

Growing Pains

Minnesota learned a few lessons from Colorado, but is still experiencing some growing pains with its program. The fee generated just $12 million during the first half of the current fiscal year—less than the amount legislative sponsors originally expected. The state Department of Revenue now projects total collections of $35 million by June 30, 2025.

New revenue programs typically take a few filing cycles to fully resonate with taxpayers, said revenue spokesman Ryan Brown.

“We’ll continue to work with all businesses to ensure they understand and meet their tax obligations under state law,” he said. “This work includes outreach and education efforts such as letters, virtual and in-person classes, filing date reminders, email notification of tax law changes, social media posts, and press releases and media interviews. It also includes compliance efforts such as audits and enforcement.”

Colorado has collected significant road fund revenues since the fee started in fiscal 2023. The state netted $76 million in 2023, $93 million in 2024, and $49 million during the first six months of fiscal 2025, according to the state revenue department.

“This minimal fee shows Colorado is committed to keeping the Centennial State’s roadways well maintained and in good repair,” said spokesperson Elizabeth Kosar.

With the surging interest in retail delivery fees, states may need to consider uniform rules to reduce compliance burdens on retailers, said Craig Johnson, executive director of the Streamlined Sales Tax Governing Board.

The board, which oversees a multistate agreement aimed at sales tax uniformity, has no current project aimed at delivery fees, but it may need to respond soon.

“No decision has been made, but I anticipate it will be discussed at upcoming meetings,” Johnson said in an emailed message. “If we are going to address it, it needs to be done sooner rather than later or we will likely end up with a patchwork of laws that retailers will have to try to navigate.”