Gas Tax Holidays at the State Level

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Gas Tax Holidays at the State Level

While legislation to temporarily suspend the federal gas tax is stalled in the Senate, state lawmakers throughout the nation are responding with their own suspensions. This is fantastic news for consumers since, on average, state taxes are 31.02 cents per gallon, which is more than one-and-a-half times the federal rate of 18.4 cents.

According to NBC News Data Point, drivers would save an average of $4 per fill-up if the 20 states that have proposed suspending all or part of their state gas taxes, along with the three that have actually done so, did so.

23

So far, the number of states that have approved or proposed gas tax holiday legislation.

Consumers appreciate any reduction with the national average price of a gallon of petrol hovering at $4.25. Here’s a summary of which states have passed gas tax holiday legislation and which may do so in the future.

Key Takeaways

  • States are stepping up with their own measures as a federal gas tax break becomes more improbable.
  • Maryland, Georgia, and Connecticut have all enacted laws announcing a temporary suspension of gas taxes.
  • Another 20 states have either submitted legislation or are in talks to reduce gas taxes.
  • While politicians support federal and state-level gas tax breaks, transportation experts remain wary.
  • Some experts are concerned that consumers may not get the full benefits of a tax relief because of lax enforcement.
  • If gas prices continue to rise, expect additional states to join the list of those contemplating a gas tax holiday.

States That Have Enacted Gas Tax Holiday Legislation

Legislators in Maryland, Georgia, and, most recently, Connecticut have all enacted laws suspending their respective states’ gas taxes. Maryland’s gasoline tax of 36.1 cents per gallon and diesel tax of 36.85 cents per gallon were delayed for a month commencing March 18, 2022, and ending April 16, 2022. When asked whether the gas tax holidays will be extended, Maryland’s Comptroller’s Office simply tells customers, “The current gas tax holiday will expire on April 16. We recommend contacting your state representatives for any potential extensions.”

Georgia Gov. Brian Kemp signed HB 304 on March 18, suspending the state’s petrol and diesel taxes until May 31, 2022. Until then, the state will not levy its 29 cents per gallon gas tax and 32.6 cents per gallon diesel tax to distributors.

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On March 24, Connecticut lawmakers opted to suspend the state’s 25 cents per gallon gas tax, but not the 10.75 cents per gallon petroleum products gross profits tax. The gas tax break is in effect from April 1 to June 30.

States Pressing for a Gas Tax Holiday

Aside from the measures approved in Maryland, Georgia, and Connecticut, lawmakers or governors in 20 states have pushed for or proposed legislation to suspend gas taxes.

Alabama: A bill filed in the state senate would suspend state fuel taxes from May 1 to September 1, 2022, but only if the average price of gasoline in Alabama remains higher than the average price in January 2022.

Alaska Gov. Mike Dunleavy (R) has requested that the state’s gas tax be suspended until June 30, 2023.

California has filed legislation to suspend the gas tax for six months. That legislation has come to a halt. Gov. Gavin Newsom has suggested deferring an expected gas tax rise, giving households up to two $400 rebate cheques per car, and offering free public transit for three months as an alternative.

Delaware: According to a plan filed in the state legislature, gasoline taxes would be suspended for 30 days.

Florida: Legislation just enacted provides a one-month gasoline tax exemption in October. Because October marks the end of the summer vacation season, the postponement was intended to favor locals rather than visitors.

Idaho: A plan being considered by the state legislature would lower the state’s petrol tax for two years.

Governor J.B. Pritzker (D) of Illinois advocated deferring the yearly gas tax rise, but other state lawmakers would rather limit the state’s gas tax at 18 cents per gallon.

Maine has presented legislation to postpone the state’s gas tax until the end of the year.

Michigan: The state legislature enacted legislation suspending the gas tax for six months starting next year.

Legislators in Minnesota have suggested a gas tax holiday from Memorial Day through Labor Day.

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Mississippi: A six-month gas tax vacation has been proposed and included into a bigger tax measure that is now being debated in the legislature.

Missouri has suggested and presented a six-month gasoline tax vacation as a bill in the state senate.

Gov. Chris Sununu (R) of New Hampshire supports a temporary suspension of the state’s gas tax.

New Jersey: The state legislature is proposing legislation that would offer customers with an immediate $250 or $500 gas tax credit.

The state legislature in New York is debating a number of legislation. Some propose suspending the tax for various time periods, while others propose capping the state gas tax at $25 per gallon.

Ohio: A plan being considered by the state legislature would lower the gas tax for five years.

Pennsylvania legislators have submitted several legislation to temporarily reduce or suspend the gas tax until the end of the year.

Rhode Island: A measure now before the state legislature would suspend the state’s gas tax for the remainder of the fiscal year.

Virginia: Gov. Glenn Youngkin (R) is advocating for a three-month gas tax break from May to July, followed by a gradual reintroduction of the state’s gas tax in August and September.

West Virginia: A group of Democratic state lawmakers has urged the governor to call a special legislative session in order to enact a gas tax holiday, which the governor argues is unlawful.

18.4 cents

The amount of money customers would save per gallon if the federal gas tax was eliminated.

Status of a Federal Gas Tax Holiday

The Gas Prices Relief Act of 2022, Senate Bill 3609, is the Congressional counterpart of state action on fuel tax suspension, in this instance, the suspension of the federal government’s 18.4 cents per gallon tax on gasoline and 24.4 cents per gallon tax on diesel.

Senator Mark Kelly (D-AZ) proposed the proposal, which was co-sponsored by six other Democratic Senators, on February 9, 2022. It was read twice and submitted to the Committee on Finance, where it sits for further action. The Senate bill repeals the federal gas tax until January 1, 2023.

Rep. Tom O’Halleran (D-AZ-1) sponsored similar legislation in the House (H.R. 6787), also named the Gas Prices Relief Act of 2022, on February 18, 2022, and submitted it to the House Ways and Means Committee, where it is similarly awaiting further action. The House version, like the Senate version, suspends the federal share of the gas tax until January 1, 2023.

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The chances of federal gas tax holiday legislation becoming law are slim since the savings from now through the end of the year would be little but the tax revenue losses would be significant—estimated at $20 billion by the Committee for a Responsible Federal Budget. This would be roughly half of the Highway Trust Fund’s projected income in 2022.

Consumers May Not See All of the Savings

Although congressional legislation has clear language declaring that Congress intends for consumers to benefit immediately from this exemption, there is worry that oil firms may not pass along all of the savings to consumers.

According to the nonpartisan Tax Foundation, the issue is that the policy “has no teeth,” just a “weak enforcement provision” requiring the US Treasury Department to “exercise all necessary powers to ensure that the benefit of the tax cut… is obtained by consumers.” According to the Foundation, there is no incentive for manufacturers to observe the law in the absence of particular fines or penalties.

The Debate Continues

In the middle of a dispute between politicians who view the popularity of gas tax holidays as a positive and transportation experts who think the notion delivers minimal savings at a significant cost in highway maintenance funding, an increasing number of states are exploring temporarily suspending their fuel taxes. Only three states have approved legislation so far, but 20 more are considering it. Others may join the list if petrol prices continue high as the popular summer travel season approaches.

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