Is There a Gas Tax Holiday in Your State?

One way for states to bring down the price of gasoline is to suspend their gas tax.

picture of shocked man pumping gas
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Gas tax holidays are helping residents fight inflation in a handful of states. Even though gas prices have dropped from the all-time highs we saw a few months ago, we're all still feeling pain at the pump this fall. The average price for a gallon of regular unleaded gas in the U.S. on December 9 is $3.32 per gallon, but prices are much higher in some parts of the country (e.g., they're averaging over $5 per gallon in Hawaii and well over $4 per gallon in California).

Over the summer, President Biden called for a three-month federal fuel tax holiday. Temporarily suspending the 18.4¢ per gallon federal gasoline tax (24.4¢ per gallon for diesel) was a popular idea at the time, according to a Politico-Morning Consult poll (opens in new tab) from June. It would have certainly put a dent in higher gas prices, even though it wouldn't have wiped out the entire price increase we experienced during the summer months. However, the problem for Biden was that he had to get Congress to approve a suspension of the federal gas tax, and the votes just weren't there.

President Biden also urged states to suspend their gas tax or provide other forms of gas tax relief. State gas tax holidays can actually help reduce gas prices more than a federal holiday because state gas taxes are higher than the federal tax in all but one state (Alaska). A few states have already suspended their gas tax temporarily or delayed gas tax increases, and a number of governors and state lawmakers in other states around the country publicly support their own fuel tax holidays. So, even though gas prices have come down, don't be too surprised if a few more states jump on the bandwagon and enact some form of gas tax relief.

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State Gas Tax Holidays in 2022

One reason why many states can afford a gas tax cut is because they have budget surpluses, due to recent economic growth and/or federal pandemic-relief funds. Five states have already temporarily suspended their gas tax – but two of the gas tax holidays are already over. A few other states have provided other forms of gas tax relief, such as delaying gas tax increases.

Maryland was the first state in the country to suspend its gas tax this year. Gov. Larry Hogan (R) signed a bill on March 18 that authorized a 30-day gas tax holiday, which saved Marylanders about 36¢ per gallon at the pump for gasoline and approximately 37¢ per gallon for diesel. However, the suspension expired at midnight on April 16. Hogan and other Maryland officials tried unsuccessfully to extend the holiday for an additional 60 days (they also were unable to suspend the 6.6¢ per gallon gas tax increase that took effect July 1). (See our Maryland State Tax Guide (opens in new tab) for more information on Maryland taxes.)

Florida has also seen its gas tax holiday come and go. It joined the list of states to enact a gas tax holiday on May 6, when Gov. Ron DeSantis (R) signed a budget bill with a provision to save drivers in the Sunshine State 25.3¢ per gallon at the pump. However, the gas tax suspension didn't start until October 1, and it only ran for one month (it expired on October 31, 2022). (See our Florida State Tax Guide (opens in new tab) for more information on Florida taxes.)

Georgia Gov. Brian Kemp (R) also put his name on a bill that suspended his state's motor fuel excise tax on March 18 – the same day that Maryland enacted its gas tax holiday (the prepaid local sales tax was not suspended). Originally, the gas tax holiday was to expire at the end of May, but the governor has extended it several times out through January 10, 2023. The Georgia tax is about 29¢ per gallon for gasoline and just under 33¢ per gallon for diesel. (See our Georgia State Tax Guide (opens in new tab) for more information on Georgia taxes.)

Connecticut became the third state to enact a gas tax holiday on March 24 when Gov. Ned Lamont (D) signed a bill to suspend the state's 25¢ per gallon excise tax on gasoline from April 1 to June 30. The Connecticut gas tax holiday has since been extended twice. The full suspension is now in place through December 31, 2022. Then, starting in 2023, the state's gas tax will be phased back in gradually over a five-month at 5¢ per gallon each month. The separate 10.75¢ per gallon petroleum products gross earnings tax was not suspended. (See our Connecticut State Tax Guide (opens in new tab) for more information on Connecticut taxes.)

New York also enacted a gas tax holiday when Gov. Kathy Hochul (D) signed a state budget bill on April 9 that saves New Yorker drivers 16¢ per gallon (16.75¢ per gallon inside the Metropolitan Commuter Transportation District) by suspending the state's sales and excise taxes on fuel from June through December. Local governments in the state can also cap the price that their separate sales tax rate is imposed on at $4 per gallon. (See our New York State Tax Guide (opens in new tab) for more information on New York taxes.)

[Although not a state, Puerto Rico also suspended its 16¢ per gallon gas tax for 45 days. Gov. Pedro Pierluisi signed the measure authorizing the gas tax holiday on June 14.]

California also provided some fuel tax relief – but not in the form of a gas tax holiday (at least not for gasoline). Gov. Gavin Newsom (D) signed budget bills on June 30 that provides California "stimulus checks" of up to $1,050 to help residents cover the rising cost of gasoline, food, and other items. In addition, the General Fund portion (3.9375%) of the sales tax rate on diesel fuel is suspended for one year starting October 1, 2022. (See our California State Tax Guide (opens in new tab) for more information on California taxes.)

While Colorado, Illinois and Kentucky haven't suspended their gas tax, they did suspend gas tax increases that were scheduled to take effect on July 1, 2022. In Colorado, a 2¢ per gallon tax boost won't kick in until April 1, 2023. (See our Colorado State Tax Guide (opens in new tab) for more information on Colorado taxes.) In Illinois, a 2.4¢ per gallon increase now won't take effect until 2023. (See our Illinois State Tax Guide (opens in new tab) for more information on Illinois taxes.) The Kentucky increase, which was to be 2¢ per gallon, is frozen until the state legislature reconvenes in 2023. (See our Kentucky State Tax Guide (opens in new tab) more information on Kentucky taxes.)

Indiana capped its use tax on gasoline at 29.5¢ per gallon through June 2023. This piece of the overall state gas tax is adjusted each month. (See our Indiana State Tax Guide (opens in new tab) for more information on Indiana taxes.)

Rocky Mengle
Senior Tax Editor, Kiplinger.com

Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.