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Gas Tax Holiday: Is Your State Pressing Pause on Fuel Tax?

President Biden has backed pausing the federal gas tax, but critics say it could do more harm than good.

A gas nozzle with a knot in its hose
President Joe Biden wants to suspend the federal gas tax for three months.
A Dragan/Getty Images

California is the latest state to pump the brakes on gas taxes: As part of a deal brokered with state lawmakers, Gov. Gavin Newsom announced the 13% sales tax on diesel would be temporarily lifted. The deal would directly benefit businesses but potentially work its way down to consumers.

President Joe Biden has called on more state governments to institute gas tax "holidays" and urged Congress to pass legislation suspending the federal gas tax for three months.

"President Biden understands that a gas tax holiday alone will not, on its own, relieve the run-up in costs that we've seen," the White House said in a June 22 statement.   

A bill in Congress to pause the gas tax, which adds 18.4 cents per gallon for gas and 24.4 cents for diesel, was introduced in the Senate in February but hasn't been brought to a vote. The price of gas is hovering at a national average of $4.87 per gallon, thanks to increased demand, and Russia's war in Ukraine, among other factors -- so there is renewed interest in the proposal.

Read MoreWhy Is Gas So Expensive?

The White House also said the pause, which would end in September, is designed "to have no negative effect on the Highway Trust Fund," which fuel taxes support. The three-month suspension would cost the fund $10 billion, according to the administration, but the loss would be offset by other revenue sources.

Six states have suspended state gas taxes and over a dozen others are debating similar moves. According to a Politico/Morning Consult poll from March, 72% of Americans support suspending their state fuel tax. 

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.

What is a gas tax holiday?

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.

Biden has endorsed pausing the tax only until the end of September.

How much would it save drivers?

The pause would save the average American driver about $2.75 every time they fill up a typical 15-gallon tank. if you filled up once a week, that would add up to a little more than $40 in savings between July and January.

If Biden's three-month pause was passed, the savings would be in the ballpark of $33.

Read more: Gas Stimulus Check: Is Your State Considering a Gas Rebate?

Will Congress pause the gas tax?

While Biden backs the idea, experts don't think Congress will take the bite. Legislation has languished in the Senate since February and, though it was introduced by a Democrat, the party's leadership has been ambivalent.

"I've not been a proponent," House Majority Leader Steny Hoyer told reporters Tuesday, according to Politico. "I just don't know that it gives much relief."

House Speaker Nancy Pelosi said there was no guarantee the savings wouldn't just be gobbled up by oil companies. "It is not necessarily landing in the pocket of the consumer," she told reporters in March, according to The Hill.

What are the arguments against a gas tax holiday?

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 steam. (The White House has now endorsed a gas tax pause through September, at a cost of $10 billion.)

"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," Rep. Earl Blumenauer, a Democrat from Oregon, wrote in a letter to Biden in mid-June. 

Blumenauer added the holiday "may only increase oil companies' bottom lines."

Some economists also argue a gas tax holiday encourages Americans to drive more rather than address oil supply shortages, and it could also stall the transition to climate-friendly energy sources.

A sign showing gas prices next to a movie theater sign showing an upset red panda
Robert Gauthier/Getty Images

"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 a February op-ed in The Hill.

MacGuineas 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?

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.

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 a half-dozen have pulled the lever. 

A woman in a car holds out cash to pay for gas

Georgia's gas tax holiday has been extended until July 14.

Carl D. Walsh/Portland Press Herald /Getty Images

California
After Gov. Gavin Newsom's efforts to suspend the 51-cent gas tax failed, as did his idea of a $400 gas tax "rebate" for each registered car, Newsom reached an agreement with state lawmakers to suspend the 13.00% sales tax on diesel fuel, which is nearing $7 a gallon.

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.

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.

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.  

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. Comptroller Peter Franchot has called for a suspension of the increase and another three-month gas tax holiday , which he said would save motorists $300 million from July to the end of September.

A two-car household buying 15 gallons a week could see savings of more than $150 over 90 days, according to Baltimore station FOX 45.

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 Dec. 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.

Where else is a gas tax holiday being considered?

Michigan
The Republican-led Senate passed a bill in early June that would suspend state taxes on gasoline and diesel fuel for three months. With gas averaging $5.01 in Michigan, if the measure was signed by Gov. Gretchen Whitmer, it would lower the price of gasoline by about 30 cents a gallon.

Whitmer has been ambivalent on the issue, but as recently as June backed "a temporary suspension of the state sales tax on gas," according to a June 22 release.

Gretchen Whitmer at a lectern

Michigan Gov. Gretchen Whitmer supports suspending the state's fuel tax.

Bill Pugliano/Getty Images

Illinois
Gov. J.B. Pritzker proposed freezing the state's gasoline tax at 39.2 cents per gallon. As of July 1, the state has suspended the planned inflation-adjustment increase to the fuel tax through Dec. 31, 2022

Missouri
The state legislature is considering suspending the state gas tax of 19.5 cents a gallon for six months, but it has not advanced. The tax is set to increase in July, but drivers can file for a refund of money they've spent on the surcharge since Oct. 2021, if they saved their receipts. Refund applications are available on the Missouri Department of Revenue's website,  

Ohio
A proposal would reduce the state's 38.5 cents-per-gallon gas taxes by about 10 cents. The bill, Senate Bill 277, has not advanced to a floor vote since it was sent to the Transportation Committee in February.