Fuel tax relief, tax rebates pursued at statehouses

April 22, 2022

Keith Goble

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Action at statehouses around the country provides fuel tax relief for at least certain drivers. Pursuit elsewhere would make available tax relief in other forms.

Colorado

In Colorado, the House Appropriations Committee voted on Friday to advance a bill that would delay an upcoming fuel tax increase.

One year ago, Gov. Jared Polis signed into law a massive transportation funding deal that includes a new 2-cents-per-gallon fee on gas and diesel. The fuel tax increase is scheduled to take effect on July 1.

The governor said at a recent news conference that “now is not the time” to increase fuel taxes.

At the governor’s urging, HB1351 would delay implementation of the new tax for six months to Jan. 1.

Delaying implementation of the new fuel tax is estimated to result in a $29.9 million hit to state revenue.

The bill has moved to the House floor.

Florida

In Florida, state lawmakers have reached an agreement on a gas tax holiday initially pursued by Gov. Ron DeSantis.

The legislature approved a state budget that includes a one-month gas tax holiday. The tax holiday from collecting the 27-cent tax rate would be for the month of October.

A portion of the state’s federal stimulus dollars will be used to cover the estimated $200 million in lost gas tax revenue.

Illinois

Illinois Gov. J.B. Pritzker has signed the state’s $46.5 billion budget for the next year. Included in the budget are tax rebates.

Checks will range from $50 to $400. The state will send out the money later this year.

The governor also signed a number of tax policy changes that include a freeze to the state’s 39.2-cent gas tax rate and 46.7-cent diesel rate.

A 2-cent cost-of-living adjustment set for July 1 will be delayed for six months.

A potential wrench could be thrown into the planned tax freeze. At issue is a requirement for fuel stations to post signs notifying customers about the tax freeze.

The Illinois Fuel and Retail Association plans to file a lawsuit against the signage requirement. The group cites opposition to “political speech” for the legal challenge.

New York

A budget deal between New York state lawmakers and Gov. Kathy Hochul includes a fuel price break. The $220 billion state budget includes a provision to partially suspend the state’s fuel taxes for seven months.

The state charges about 33 cents per gallon for gas and diesel. There are multiple components that make up the state’s fuel tax collection.

There is an 8-cent excise tax and a 17.3-cent petroleum business tax. Additionally, there is an 8-cent state sales tax.

The deal reached would trim tax collection by 16 cents per gallon. Specifically, excise tax and state sales tax collection would be suspended from June 1 through the end of the year.

New York’s excise tax and the sales tax raise about $485 million each per year.

The tax break will cost the state $585 million in lost fuel revenue.

Virginia

In Virginia, the House Finance Committee voted this week to approve legislation to suspend state fuel tax collection for three months.

Virginia collects a 26.2-cent-per-gallon tax on gas and a 27-cent rate for diesel.

Gov. Glenn Youngkin is calling for the tax holiday to run from May through July, and to phase it back in slowly in August and September.

The Republican governor said the state could absorb the lost revenue by tapping into excess transportation funds. The amount needed is estimated to be about $437 million.

His plan would also cap the annual adjustment to the fuel taxes at no more than 2% per year “to further protect Virginians from the hidden tax increase of inflation.”

The bill, HB6001, awaits further House consideration.

Leading Democrats are opposed to a fuel tax break. Instead, they want to send $50 rebate checks to vehicle owners.

They say rebates would provide money directly to Virginians without affecting transportation funds.

 

Action taken

Three states have already acted to provide tax relief at the pump.

Connecticut

In Connecticut, a three-month holiday from paying the state’s 25-cent excise tax on gas took effect April 1. The tax holiday does not affect the 41.1-cent excise tax on diesel.

The gas tax holiday runs through the end of the fiscal year – June 30.

Suspension of the gas tax for three months will cost the state $90 million.

Georgia

A fuel tax holiday that includes diesel is ongoing in Georgia.

The state normally collects a 29.1-cent gas tax and a 32.6-cent diesel tax.

Gov. Brian Kemp last month signed into law a suspension of state fuel taxes through May 31.

The governor said the state is in a good position to provide a tax break because of a $3.7 billion budget surplus through fiscal year 2021.

Maryland

Maryland was the first state to take action on a fuel tax holiday.

A 30-day suspension of the state’s 36.1-cent gas tax and 36.85-cent diesel tax concluded April 16.

Suspending the collection of fuel taxes is estimated to cost the state $100 million.

Advocates say the lost revenue would be covered by dipping into the state’s $7.5 billion budget surplus.

IFTA effect

Pursuit at statehouses for fuel tax holidays that would include diesel has the attention of professional drivers. Truckers want to know what a tax break would mean for paying their fuel tax through the International Fuel Tax Agreement.

IFTA Executive Director Carmen Martorana recently told Land Line Media that drivers wouldn’t have to pay state fuel tax if they are buying and burning the fuel in a state that is not collecting the tax.

Martorana pointed out that drivers who buy fuel in a state with a fuel tax exemption and drive in a state without an exemption, drivers would have to pay that tax out of pocket.

She added that if a driver pays taxes on fuel in one state, but then drives in a state that has a tax holiday, they can get reimbursed.

Rebates instead

In New Mexico, focus on relief will come in the form of rebates.

New Mexico Gov. Michelle Lujan Grisham recently signed into law legislation to provide a gas tax rebate.

During a special session earlier this month, legislation was approved to give single tax filers a $500 rebate check. Joint filers would receive $1,000.

The money will be made available in two separate payments, with the first payment by June 30. The second check will follow in August.

California

Work underway in California would tap into the state’s budget surplus to send rebate checks to all California taxpayers. The proposed amount for each taxpayer is $400.

“We believe a rebate is a better approach than suspending the gas tax – which would severely impact funding for important transportation projects and offers no guarantee that oil companies would pass on the savings to consumers,” a letter from Democratic leaders reads.

The rebate checks would be sent to every California taxpayer, regardless whether they own or drive a vehicle.

The proposal is estimated to cost the state $9 billion. The state’s budget surplus would be tapped to cover that amount.

Democratic Gov. Gavin Newsom has said he supports some relief from high fuel prices.

Newsom said during his annual State of the State address last month that he supports a rebate plan. He also wants to pause a part of the sales tax rate on diesel for one year, and to suspend the inflationary adjustment on gas and diesel excise that is set for July 1.

Newsom wants to send debit cards to drivers of gas-powered vehicles and electric-powered vehicles.

His proposal has a more than $10 billion price tag.

In addition to $9 billion in tax refunds, up to $600 million would be necessary to pause a part of the sales tax rate on diesel for one year. Another $523 million would be used to pause the inflationary adjustment to gas and diesel excise tax rates.

Not tied to fuel costs

Elsewhere, the rebate option is not directly tied to fuel costs.

In addition to the fuel tax holiday, Georgia lawmakers approved making available tax rebates.

Single filers are eligible for $250 rebates. Joint filers are eligible for $500 rebates.

Idaho tax filers are eligible for $75 rebates or 12% of their 2020 state taxes, whichever is greater.

Tax filers in Indiana soon will receive a $125 one-time tax refund.

Many Maine taxpayers are eligible to receive $850 relief payments starting June 1.

Work underway at other statehouses would also provide tax relief.

Kansas Gov. Laura Kelly is pushing for a $250 tax rebate for single filers to help with rising prices. Joint filers would get $500.

The one-time rebate would be used for state residents who filed a 2020 tax return in 2021.

In Kentucky, the Senate has approved a plan for a one-time payment of up to $500 for single tax filers. Households would receive up to $1,000.

The Missouri Senate has approved legislation to provide a one-time tax credit. Individual filers would get $500 and joint filers would receive $1,000.

Multiple pursuits in New Jersey would provide tax rebates.

Sen. Ed Durr, R-Gloucester, is leading pursuit to offer a $250 rebate to single tax filers who make up to $125,000 per year. Joint filers making up to $250,000 annually would receive a $500 rebate.

The plan has a nearly $1.9 billion price tag for the state, according to the New Jersey Office of Legislative Services.

The bill, S2290, is in the Senate Transportation Committee. The Assembly version, A3704, is in the Assembly Commerce and Economic Development Committee. LL

Land Line Now Senior Correspondent Ashley Blackford contributed to this report.

More state trends

Keith Goble, state legislative editor for Land Line Media, keeps track of many trends among statehouses across the U.S. Here are some recent articles by him.

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.