As the price of gas hovers just under $5 a gallon, President Joe Biden is expected to make a decision about whether to support a federal gas tax holiday by the end of the week.
A bill to pause the tax, which adds 18.3 cents a gallon, was introduced in the Senate in February. It hasn’t been brought to a vote, but the president could urge lawmakers to pass it in an aim to ease higher gas prices, which have been brought on by increased demand, the rising price of crude and Russia’s war in Ukraine, among other factors.
Maryland, Georgia, Connecticut, New York and Florida have all suspended state gas taxes and more than a dozen other states are debating similar moves. According to a Politico/Morning Consult poll from March, 72% of Americans support suspending their state fuel tax.
In his state budget, California Gov. Gavin Newsom called for a $400 rebate for households with a registered car. Chicago has already distributed some 20,000 $150 gas cards via lottery.
The Biden administration is also looking into gas rebate cards, The Washington Post reported.
Which states have put the brakes on gas taxes? How much is it saving drivers? Is your state next? Here’s everything you need to know.
How much would a federal gas tax holiday save drivers?
Introduced by Democratic Sens. Maggie Hassan and Mark Kelly, the Gas Tax Relief Act would pause the federal fuel tax — which is about 18.3 cents a gallon for retail gasoline and 24.3 cents a gallon for diesel — until Jan. 1, 2023. That would save the typical American driver about $2.75 every time they filled up.
Members of the Biden administration have indicated the president is seriously considering endorsing a pause on the federal gas tax.
US Treasury Secretary Janet Yellen told ABC’s This Week on June 19 that it’s “an idea that’s certainly worth considering.”
“There are a lot of different ideas and proposals in Congress. I think what we have to do is make sure that any solution that we arrive on contemplates the long term as well,” Transportation Secretary Pete Buttigieg told the Detroit Free Press in early June.
What are the arguments against pausing the gas tax?
Critics, including other Democrats in Congress, say even temporarily lifting the tax would hurt the infrastructure projects that it funds.
A gas tax holiday would cost a reported $20 billion, according to the Committee for a Responsible Federal Budget, at a time when Biden’s Build Back Better plan has seemingly run out of gas.
“While there is undoubtedly a need to provide American consumers relief from spiking costs, there is no guarantee a gas tax suspension would reduce prices at the pump or stem the broader inflation affecting the global economy, and it may only increase oil companies’ bottom lines,” Rep. Earl Blumenauer, a Democrat from Oregon, wrote in a letter to Biden.
Some economists argue a gas tax holiday doesn’t address issues involving the oil supply, instead encouraging Americans to drive more. It could also stall the transition to climate-friendly energy sources.
Robert Gauthier
“It’s a way for politicians to pretend they are making the situation better, when in fact they are making it worse,” Maya MacGuineas, president of the nonprofit Committee for a Responsible Federal Budget, wrote in an op-ed in The Hill.
She predicts oil producers and gas stations would swallow any savings by raising the pretax price of gasoline. Analysis by the Transportation Investment Advocacy Center indicates that, over the past decade, less than 20% of state gas tax cuts have been passed down to consumers.
There’s also a question of how much it really benefits drivers: If the federal gas tax was suspended for the rest of 2022, according to Kiplinger, someone who drives 12,000 miles a year in a car that averages 25 miles per gallon would only save about $55.
Which states have suspended gas taxes?
Proposals to limit fuel taxes, which fund interstate highway repair and mass transit projects, have been introduced in more than 20 states. So far only five have pulled the lever.
Maryland
On March 18, Maryland paused its 36-cent-a-gallon tax on retail gasoline and its 37-cent tax on diesel for 30 days. Prices dropped 21 cents on average that day, according to AAA Mid-Atlantic.
“This is, of course, not a cure-all, and market instability will continue to lead to fluctuations in prices,” said Maryland Gov. Larry Hogan, who also supports suspending the automatic increases in the state fuel tax, but such efforts seem unlikely to bear fruit.
Starting July 1, Maryland’s gas tax, which is tied to inflation, is set to rise 7 cents to 43 cents per gallon.
On June 13, Comptroller Peter Franchot called for a special session of the Maryland General Assembly to pass another three-month gas tax holiday and suspend the state’s automatic fuel tax increase, which he said would save motorists $300 million from July to the end of September.
Baltimore station FOX 45 estimated a two-car household buying 15 gallons a week could see a savings of more than $150 over 90 days.
Georgia’s gas tax holiday has been extended until July 14.
Carl D. Walsh/Portland Press Herald /Getty Images
Georgia
Georgia’s General Assembly voted unanimously to pause state fuel taxes until May 31, shaving 29.1 cents a gallon off the price of gasoline and 32.6 cents per gallon off diesel. Gov. Brian Kemp, who said lost revenue is being covered by state surplus funds, extended the gas tax holiday until July 14.
Georgia last suspended its fuel tax in May 2021, when the Colonial Pipeline network shut down.
Connecticut
Connecticut Gov. Ned Lamont signed a bipartisan bill on March 24 temporarily lifting the state’s 25-cents-a-gallon motor vehicle tax from April 1 to June 30 — a step that will save drivers an estimated $90 million.
On Thursday, a gallon of gas in the Nutmeg State was $4.98, up about 63 cents from before the tax was suspended.
New York
In April, lawmakers in Albany approved a budget that suspends the state’s 8-cent fuel tax and an 8-cent sales tax between June 1 and December 31. The move is projected to save New York drivers about 16 cents a gallon.
“By suspending certain fuel taxes for the next seven months, New York is providing some $609 million in direct relief to New Yorkers, a critical lifeline for those who need it most,” Gov. Kathy Hochul said in a statement.
Florida
In May, Republican Gov. Ron DeSantis signed a budget that includes a one-month fuel-tax holiday beginning Oct. 1 that will lower the price of gas by 25.3 cents a gallon.
What are other states doing about gas taxes?
State gas taxes — which can include an excise tax, sales taxes, oil inspection fees, county and local taxes and other charges — vary greatly. Pennsylvania has the highest, nearly 59 cents a gallon, and Alaska the lowest, a little over 33 cents a gallon. The weighted national average is about 57 cents a gallon.
In Michigan, a Republican measure to suspend the state’s gas tax failed to garner sufficient support. Gov. Gretchen Whitmer has said she backs temporarily suspending the sales tax on gasoline instead. Senate Minority Leader Jim Ananich wants to cut the 6% fee for one year.
With gas averaging $5.20 in Michigan, lifting the sales tax would lower the price by about 31 cents a gallon.
Michigan Gov. Gretchen Whitmer opposes suspending the state’s fuel tax but supports pausing the 6% sales tax on gasoline.
Bill Pugliano/Getty Images
Illinois Gov. J.B. Pritzker proposed freezing the state’s gasoline tax at 39.2 cents per gallon. A bill in Missouri’s state legislature would suspend the state gas tax of 19.5 cents a gallon for six months, but it has not advanced.
In a more moderate move, a measure introduced in Ohio would reduce the state gas taxes by about 10 cents a gallon. The bill, Senate Bill 277, has not advanced to a floor vote since it was sent to the Transportation Committee in February.
After efforts in California to suspend the 51-cent gas tax failed, Gov. Gavin Newsom inserted a $400 gas tax “rebate” into his state budget in May. Every household with a car registered in the state would be eligible, up to two cars per family. The $9 billion plan would be funded by the state’s budget surplus, Newsom said.
Some cities are coming up with their own solutions: Since April, Chicago has issued tens of thousands of $150 gas cards and $50 public-transport vouchers to eligible residents via lottery.
In addition to pausing the federal gas tax, Biden is reportedly mulling over gas rebate cards. But an administration official told CNN it’s unlikely to happen. There’d be no way to ensure a card was only used for gas, they said, and getting Congress to approve the emergency funding necessary would be “challenging.”