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Federal 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 it.
President Joe Biden wants to suspend the federal gas tax for three months.
A Dragan/Getty Images

President Joe Biden on Wednesday called on Congress to suspend the federal gas tax for three months and encouraged state governments to pass similar legislation.

"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 statement.  But, it added, "when the war in Ukraine is imposing costs on American families, Congress should do what it can to provide working families breathing room."

Read More: Why Is Gas So Expensive?

A bill to pause the tax, which adds 18.3 cents per gallon, was introduced in the Senate in February but hasn't been brought to a vote. With the price of gas hovering just under $5 a gallon -- thanks to increased demand, the rising price of crude and Russia's war in Ukraine, among other factors -- there is renewed interest in the proposal.

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.

Maryland, Georgia, Connecticut, New York and Florida have all suspended state gas taxes. 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. 

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?

That would save the typical 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.

Will Congress pass a bill pausing 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.

Biden has also reportedly been mulling over gas rebate cards but an administration official told CNN it's also unlikely. There'd be no way to ensure a card was only used for gas, the source said, and getting Congress to approve the emergency funding necessary would be "challenging."

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.

gas prices
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?

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. 

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.

gas prices

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

Carl D. Walsh/Portland Press Herald /Getty Images

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 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.

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.

Gretchen Whitmer

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.  

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