Relief at the pump? Here are the states suspending gas taxes

Connecticut became the latest state to approve a gas tax holiday as the governor signed a bill into law Thursday suspending the 25-cents-per-gallon tax from April until June. American consumers are facing the greatest pain at the pump seen in years amid uncertainty over Russia’s invasion of Ukraine and the country coming out of a global pandemic. Now, state and federal officials are grappling with how to provide relief. 

Gas prices reached a record high in mid-March with the national average hitting $4.33 per gallon of regular unleaded gas and more than $5.13 for diesel according to tracking by AAA. The national average gas prices have since come down slightly but still remain high. And some states continue to see average prices topping $5 a gallon. 

Even before Russia invaded Ukraine, gas prices were on the rise as demand increased with pandemic related restrictions easing. But the invasion provided an additional shock as countries moved away from Russia – one of the largest producers of oil in the world. 

At the federal level, the Biden administration earlier this month announced the release of 30 million barrels of crude oil from the Strategic Petroleum Reserve in a coordinated effort with allies to ease energy prices around the world. It comes after a similar release of 50 million barrels last fall. 

Some members of Congress have also called for the suspension of the federal gas tax, which is just over 18 cents per gallon for gas and 24 cents per gallon for diesel, but it was met with bipartisan opposition, with some lawmakers calling it a “gimmick.” While the Biden administration has left the door open to a gas tax holiday, some officials have voiced concerns over whether companies would actually pass the relief on to consumers. 

States have their own gas taxes and fees. State gas tax and fees averaged 38.69 cents per gallon at the start of this year, according to the American Petroleum Institute. Some states have already begun to suspend gas taxes in an effort to help consumers.

According to Ulrik Boesen, director of excise tax policy at the Tax Foundation, suspending gas taxes would provide some relief, but it is not the most efficient tax relief.

“We all know how much gas costs around us because we see the big signs and that’s a good target,” Boesen said. “But it’s more good politics than good policy because you could offer that relief more directly to people.”

Boesen warns there are a lot of opportunities for some other entities to take some of the savings before it gets to consumers at the pump, so the real relief depends on how states approach it. 

Here are the states suspending gas taxes:

Connecticut 

On March 23, lawmakers in the state House and Senate passed a bill with bipartisan support suspending the state’s 25-cents-per-gallon motor vehicle tax for retail customers. It was signed into law by Governor Ted Lamont less than 24 hours later. The temporary measure runs from the beginning of April through the end of June. In mid-March, Lamont said the tax cut could cost about $90 million.

Georgia

On March 18, Georgia Governor Brian Kemp signed a bill to temporarily suspend the state’s excise tax on motor fuel sales. The state’s rate is 29.1 cents per gallon for gasoline and 32.6 cents per gallon for diesel. The suspension lasts through May 31, 2022 and applies to gas and diesel as well as some other forms of motor fuel such as liquid propane gas. 

Maryland 

Maryland became the first state to suspend its gas tax on March 18. The emergency legislation which suspends the tax for 30 days applies to the 36.1 cents per gallon tax on gas and 36.85 cents per gallon tax on diesel fuel. The move is expected to cost the state $100 million.

Other state action

Other states could follow suit on suspending gas taxes or passing other measures to help ease pain at the pump. In Ohio, state Senate Republicans have introduced a bill to temporarily cut the motor fuel excise tax rate for both gas and diesel to 28 cents per gallon for five years. The current state tax is 38.51 cents. 

In California, a group of Democratic lawmakers have proposed a plan to use $9 billion from the state budget surplus to provide a $400 gas rebate to every California taxpayer. It comes after the governor called for relief to help people struggling with higher costs. A group of California Republican lawmakers had called for suspending the state’s gas tax, but they did not get enough support in the assembly to move forward. 

In West Virginia, a group of Democratic lawmakers have asked GOP Governor Jim Justice to call a special session to suspend the state’s 35.7 cents per gallon gas tax for 30 days. 

In Florida, the state legislature included a monthlong gas tax holiday in the state budget passed in mid-March, but it does not take place until October. Governor Ron DeSantis, a Republican, has the final say over what is spent.