States take action on fuel tax relief, tax rebates
May 10, 2022
State lawmakers around the country are taking action to provide breaks from fuel taxes for at least certain drivers and relief in other forms.
In Florida, Gov. Ron DeSantis acted on May 6 to follow in the footsteps of four other states to provide a tax holiday from at least some fuel expenses.
The tax package, HB7071, provides for 10 sales tax holidays including a gas tax holiday. Diesel fuel is not affected.
The state collects a 27-cent tax rate on gas purchases.
Tax collection will cease 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.
“Florida has been fiscally responsible, so we are in a good position to provide meaningful relief for families right now,” DeSantis said in a news release.
New York is another state to provide tax relief.
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.
A budget deal between state lawmakers and Gov. Kathy Hochul will trim tax collection by 16 cents per gallon. Specifically, excise tax and state sales tax collection will 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 is projected to cost the state $585 million in lost fuel revenue.
First three to act
Connecticut, Georgia, and Maryland acted two months ago to provide tax relief at the pump.
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 was set to run through the end of the fiscal year, June 30. As part of a budget deal agreed upon by state lawmakers and Gov. Ned Lamont, the tax break will be extended to Dec. 1.
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 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 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.
Pursuit at statehouses for fuel tax holidays that include diesel has had truckers asking what a tax break would mean for paying their tax through the International Fuel Tax Agreement.
IFTA Executive Director Carmen Martorana previously 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 said 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.
Colorado, other states pursue action
In Colorado, a bill sent to Gov. Jared Polis would delay an upcoming fuel tax increase.
One year ago, the governor 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.
Polis said earlier this year that “now is not the time” to increase fuel taxes.
At the governor’s urging, HB1351 would delay the 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 Alaska Senate Transportation Committee is scheduled to consider a bill Tuesday, May 10, to suspend the state’s fuel tax for one year.
The state collects an 8-cent-per-gallon tax on gas and diesel purchases.
HB104 would suspend the collection of the tax through June 30, 2023.
Gov. Mike Dunleavy asked state lawmakers two months ago to take the action.
House lawmakers voted 36-2 last week to approve the tax holiday.
Renewed pursuit in Michigan would suspend the state’s tax on gas and diesel for four months.
The state charges a 27.2-cent excise rate on gas and diesel.
Sponsored by Sen. Roger Victory, R-Hudsonville, the bill would suspend tax collection from May 15 to Sept. 15.
“This tax relief measure would reduce the burden on virtually everyone in Michigan – including families trying to make ends meet, businesses facing higher transportation costs, farmers growing the food we need, and an entire tourism industry relying on visitors vacationing in our state,” Victory stated.
In March, the Legislature approved legislation to suspend the fuel tax for six months. Gov. Gretchen Whitmer, however, vetoed the bill. Instead, she said she supports suspending the state’s sales tax on fuel.
Victory’s bill, SB1029, is in the Senate Transportation and Infrastructure Committee.
Two Rhode Island bills would suspend the collection of the state’s fuel tax at least through the end of the year.
The state collects a 34-cent-per-gallon excise tax on gas and diesel sales.
The first bill, H7983, would impose a moratorium on the excise tax until June 30, 2023.
The second bill, H8006, would provide a tax break until Dec. 31, 2022.
Both bills are in the House Finance Committee.
In addition to fuel tax holidays, other pursuits in statehouses across the country are geared toward providing tax relief in the form of rebates.
A New Mexico law provides a gas tax rebate.
Approved during a special session, the legislation gives single tax filers a $500 rebate check. Joint filers will 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.
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.
Bipartisan pursuit at the California statehouse for fuel tax relief has died.
As a result, a scheduled inflationary adjustment on gas and diesel excise will occur on July 1. The rate increase is expected to be nearly 3 cents per gallon.
Instead, relief efforts that include rebates remain on the table.
“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 state’s budget surplus would be tapped to send rebate checks to California taxpayers making less than $125,000 or families making less than $250,000. The proposed amount for each taxpayer is $200.
Democratic Gov. Gavin Newsom has proposed giving $400 per vehicle to drivers, with a maximum of $800 per family.
Relief at the pump, however, is not dead.
A group of bipartisan lawmakers dubbed the Problem Solvers Caucus announced last week their pursuit of a year-long suspension of the state’s 51.1-cent gas excise tax.
Retailers would be required to pass 100% of the tax relief on to consumers.
“Democrats, Republicans, and independents are all feeling the pain at the pump,” stated Assembly member Adam Gray, D-Merced. “This is not a partisan problem. The Problem Solvers support taking immediate action to lower gas prices while looking for long-term affordability solutions.”
Elsewhere, rebate plans not directly tied to fuel
In addition to the fuel tax holiday, Georgia lawmakers approved tax rebates of $250 for single filers and $500 for joint filers.
Rebates also are, or soon will be, available for filers in Idaho, Indiana, and Maine. Amounts range from $75 to $850.
Ongoing pursuit to provide tax relief is found in states that include Hawaii, Kansas, Missouri, and New Jersey. 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.