Environment

How states aim to tackle high gas prices with tax holidays, rebates for residents

Bloomberg | Bloomberg | Getty Images

As gas prices have soared across the country, some politicians have floated a potential solution: temporarily halting the collection of taxes charged at the pump.

That includes proposals to suspend the federal tax of 18.4 cents per gallon, as well as state taxes that average about 39 cents per gallon.

The national average for a gallon of gas is currently $4.22, according to AAA. That’s up from the $3.61 average drivers saw a month ago and $2.87 a year ago.

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An NBC News poll found 8 in 10 Americans worry the war between Russia and Ukraine will increase gas prices.

Politicians are rushing to ease those financial worries. President Joe Biden on Thursday announced the U.S. will use oil from strategic reserves to help force down gas prices.

Meanwhile, leaders at both the federal and state level have sought to temporarily suspend taxes consumers pay at the pump.

Experts say a break from those taxes won’t necessarily result in big savings.

“It does take money out of state coffers that could be used for something else,” such as paying for state unemployment benefits, said Scott Roberti, who leads Ernst & Young’s state policy services practice.

Several states have already put gas tax holidays in place.

Connecticut

Connecticut Gov. Ned Lamont, a Democrat, signed emergency legislation on March 24 to suspend the state’s gas tax from April 1 through June 30. The state’s tax on gasoline is 25 cents per gallon.

In addition, the legislation also suspends fares on public buses statewide during that same period.

Georgia

Georgia Republican Gov. Brian Kemp signed legislation on March 18 that will temporarily remove the state’s tax on gas through May 31.

The state typically applies levies of 29.1 cents per gallon on gas.

Maryland

Maryland Republican Gov. Larry Hogan signed legislation on March 18 that suspends the state’s gas tax of 36.1 cents per gallon for 30 days.

“I think it makes a huge difference to the average consumer and I can tell you that the average price across the country is something like $4.25 — we’re down around $3.75 so we’re 50 cents a gallon cheaper than most,” Hogan said during an interview with CNBC’s “Squawk Box.”

Other states could follow

Other states may follow the precedent set by Connecticut, Georgia and Maryland with their own gas tax holidays, and in some cases, direct rebate payments to residents.

Here’s a roundup of activity that has taken place in recent weeks.

Alabama

A proposal has been raised by certain state representatives to suspend the state’s gas tax from May 1 through Sept. 1, or until the average monthly prices per gallon are at or below what the monthly price was in January.

Alaska

Gov. Mike Dunleavy has asked the state’s House of Representatives to consider suspending state motor fuel taxes of 8 cents per gallon through June 2023. The state Senate passed a non-binding resolution in support of the proposal.

California

A driver fuels a vehicle a gas station in Richmond, California, on March 24, 2022.
David Paul Morris | Bloomberg | Getty Images

Democratic Gov. Gavin Newsom has unveiled a proposal to send drivers $400 debit card rebates. The payments would be determined by vehicle registration, not tax records. Individuals could receive up to two payments, which would start in July if approved by the state legislature.

Separately, a bill introduced in January would suspend the tax on motor vehicle fuels for six months.

Colorado

Colorado Democratic Gov. Jared Polis has sought to delay a new 2 cents per gallon fee on gas. In addition, he sent a letter with five other governors urging Washington lawmakers to suspend the federal gas tax of 18.4 cents per gallon.

Delaware

Lawmakers are seeking to send $300 checks to all state residents who filed 2020 tax returns. However, the legislation still needs to be formally proposed and passed.

Florida

Lawmakers have agreed to suspend the state’s gas tax for one month in October. Florida’s gas tax is about 27 cents per gallon.

Illinois

Bills to temporarily suspend or reduce the state gas tax have been introduced in the Illinois General Assembly. Democratic Gov. J.B. Pritzker has sought to halt a 2.2 cents per gallon increase set to go into effect in July.

Maine

Efforts to temporarily suspend the state’s gas tax of 30 cents per gallon through the rest of the year have stalled. However, Democratic Gov. Janet Mills has proposed sending $850 checks to state residents amid high gas prices and inflation.

Massachusetts

A taxi driver refuels a vehicle at a Gulf gas station in Boston on March 1, 2022.
Vanessa Leroy/Bloomberg via Getty Images

The Massachusetts state Senate recently voted against a proposal to pause the state’s gas tax of 24 cents per gallon through Labor Day. However, the state does plan to send $500 payments to low-income workers this month.

Michigan

While the Republican-led state legislature passed a bill to suspend Michigan’s gas tax of 27.2 cents per gallon for six months, Democratic Gov. Gretchen Whitmer has said she would veto the proposal. Whitmer is among the governors who have petitioned federal lawmakers to suspend the national gas tax.

Minnesota

State lawmakers have called for pausing the state’s gas tax of 28.5 cents per gallon from Memorial Day to Labor Day.

Mississippi

Mississippi Lieutenant Gov. Delbert Hosemann and other state lawmakers have proposed suspending the state’s gas tax of 18.4 cents per gallon for six months.

Missouri

One proposed bill aims to suspend the state’s gas tax of 19.5 cents per gallon from July 1 through Dec. 31.

New Hampshire

New Hampshire Gov. Chris Sununu has said he is on board with the idea of giving drivers a temporary reprieve from the state’s taxes on gas at the pump.

New Jersey

The city council of Newark, New Jersey, unanimously passed a resolution March 3, 2022, urging the the state’s largest city to suspend all licenses of two local Lukoil gasoline stations to show support for Ukraine amid the Russian invasion.
Eduardo Munoz | Reuters

Gov. Phil Murphy has proposed tax rebates of up to $700 for homeowners earning up to $250,000 per year in income and $250 for renters who earn up $100,000. Separately, legislation has been proposed to cut the state’s 42.4 cents per gallon gas tax in half if the average price of an unleaded gallon reaches $4.51 in summer months.

New York

Certain New York state political leaders have backed suspending the state gas tax of about 33.3 cents per gallon of gas. Depending on the proposal, that could last through the end of the year or for one year.

Ohio

A state Senate proposal seeks to reduce Ohio’s gas taxes to 28 cents per gallon from 38.5 cents per gallon.

Pennsylvania

State lawmakers have proposed eliminating a portion of Pennsylvania’s gas tax of 57.6 cents per gallon through the end of the year.

Rhode Island

State lawmakers have proposed suspending the state’s 34 cents per gallon gas tax through the end of the year.

South Carolina

One group of lawmakers is calling for a one-year suspension of the state’s 26 cents per gallon gas tax.

Tennessee

Certain state Democratic lawmakers have urged Tennessee Gov. Bill Lee to suspend the state’s gas taxes of 27.4 cents per gallon for 90 days.

Virginia

Virginia Republican Gov. Glenn Youngkin has proposed suspending the state’s 26.2 cents per gallon tax on gas for three months, from May through June. Those levies would then be gradually phased back in from August through September.

Washington

A proposal to suspend Washington state’s gas tax of 49.4 cents per gallon through the end of the year failed to get brought up for a vote.

West Virginia

Certain West Virginia Democratic lawmakers are pushing for a 90-day suspension of the state’s 35.7 cent per gallon tax on gas.

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