What Is a Gas Tax Holiday? (And Does My State Have One?)

Gas prices are straining Americans’ budgets and fueling historic inflation. Hint: The average price is currently around $5 per gallon. So, to help make gas prices cheaper, lawmakers in some states are telling residents, ‘take a gas tax holiday.’

Come again, what’s a gas tax holiday?

It’s a temporary break from paying the extra taxes put on each gallon of gas. Which can add up: the average state gas tax is about 30 cents per gallon. While it doesn’t get rid of the 18.4 cents per gallon of federal gas taxes (though there are calls to suspend that, too), it’s still a bit of relief. 

I’d love a holiday. Where do I sign up?

So far, only four states have official gas tax holidays in place. See if your state is on the list:

Connecticut

Connecticut has a gas tax of 25 cents per gallon. It’s suspended through June 30. 

Florida 

Florida’s gas tax holiday won’t take effect until October 2022, and will only last a month. But it will save residents 25.3 cents per gallon.

Georgia

Georgia’s gas tax of 29.1 cents per gallon is suspended through July 14 thanks to an executive order by the governor. 

New York

The Empire State is suspending gas taxes from June 1 through the end of 2022. That’s a savings of 16 cents per gallon.

Help. My state’s not on the list. 

States have their reasons for not suspending the gas tax. A big one: It cuts back on the revenue states have for improving infrastructure and repairing roads.

Even if they’re not implementing gas tax holidays, some states are deciding not to raise their gas taxes this year. Like Kentucky, which is holding off on adding another two cents per gallon that would have taken effect July 1. 

In California, relief at the pump could come in the form of rebate checks. But the exact details of the plan aren’t yet worked out. It could be late summer before California residents see anything in their mailboxes.

Some are also calling to suspend the 18.4-cent-per-gallon federal gas tax through the end of the year. A big proponent? President Joe Biden. He’s asked Congress to suspend the federal gas tax through the end of September. And he wants governors to do the same with their state gas taxes. Or send other help directly to Americans in the form of rebates or relief payments.

Yeah, will a gas tax holiday even help?

Maybe. Maybe not.  Some are afraid that the savings would help corporations primarily. Because there’s no way to force them to pass along these cut taxes to consumers. 

Plus, many economists warn it could lead to higher inflation. The problem? It could give people more money to spend elsewhere. And the government is already working to curb spending (hi, interest rate hikes). 

Any other ways I can save?

While the government debates whether a gas tax holiday is the move, an easy way to save is to shop around. There are plenty of free apps you can use to compare prices. And using public transportation or opting to walk or bike are also great ways to save a bit at the pump. If you belong to your local bulk club store (hi, Costco and Sam’s Club), that membership could help you save on gas, too. 

Oh, and adjust your budget for those higher prices so they don’t drive your financial plan off course. 

theSkimm

Gas prices are causing some pain across the country, but legislators are taking notice. A gas tax holiday could be heading your way. If not, shopping around for gas and using alternative forms of transportation could help you save on your own. 

Updated June 22 to include Biden’s most recent calls to suspend the federal gas tax.