California’s inflation relief package includes diesel sales tax break

July 1, 2022

Keith Goble


California Gov. Gavin Newsom on Thursday signed a $308 billion state budget that includes relief for truck drivers.

Newsom, Senate President Toni Atkins, and Assembly Speaker Anthony Rendon say the centerpiece of the deal offers tax refunds to many working Californians. The agreement is part of a $17 billion inflation relief package.

The budget taps a portion of the state’s $97 billion surplus to cover direct payments of up to $1,050 to 23 million Californians.

The tax refunds will be distributed starting in October. Costs to the state for the refunds is estimated at $9.5 billion.

Truck drivers get relief

Also included in the relief package is a pause in the state’s sales tax on diesel.

California collects a 3.9375% sales tax on diesel purchases.

The budget gives truck drivers a break from the additional fuel expense for one year.

The state will tap general fund money to cover the $327 million in lost revenue for transportation purposes.

Fuel tax relief not part of deal

Bipartisan pursuit at the California statehouse for fuel tax relief was not included in the budget.

As a result, a scheduled inflationary adjustment on gas and diesel excise took effect on Friday.

Excise tax collected on gas purchases has been set at 51.1 cents with the diesel rate at 38.9 cents.
As of the first of the month, the gas rate is up 2.8 cents per gallon to 53.9 cents.

The diesel tax is up 2.1 cents per gallon to 41 cents.

Democratic leaders have maintained that a rebate is a better approach than suspending fuel tax collection. They said in a recent letter that a fuel tax holiday would severely impact funding for important transportation projects and offer no guarantee that oil companies would pass on the savings to consumers.

Transportation money

The budget includes $14.8 billion for transportation infrastructure improvements.

The focus is on rail and transit, “climate adaptation projects,” pedestrian projects, high-speed rail, and ports.

Getting it done

The governor and Democratic leaders at the statehouse were pressed to get a deal done with the July 1 budget deadline looming. The first of the month marks the start of a new fiscal year.

“California’s budget addresses the state’s most pressing needs and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries,” reads a statement from the governor and legislative leaders. LL

More Land Line coverage of news from California.