The decision forces a showdown with the Democratic-controlled House over how to pay for roads.
House Democrats increased the tax to 32.3 cents per gallon. The change would give the state an extra $107 million during the next two years to spend on road construction.
Republican Senate President Robert Stivers said he did not think Kentuckians wanted to pay higher taxes. Democratic House Speaker Greg Stumbo said Republicans are just trying to improve profits for oil companies.