What Is A Fuel Tax Holiday And Why It May Help

By Kristi Eckert | 3 months ago

fuel tax holiday

Americans are all feeling the excessive pressure outrageously high gas prices are putting on their wallets. Suddenly filling up your 15 or 20-gallon gas take means you could be laying out close to or over $100. Particularly in states like California, where AAA is reporting the current average gas price as $5.875 per gallon. It’s a tough pill to swallow. Especially for those who fall in lower-income brackets and have no extra room in their budgets to support such high fuel costs. However, all hope might not be lost thanks to something called a fuel tax holiday. NPR reported that many states have started to implement fuel tax holidays and those holidays may just be the small saviors that the country needs right now. 

So what exactly is a fuel tax holiday? And how exactly can it help? A fuel tax holiday is essentially a period of time in which a state’s legislature enacts a bill that effectively suspends the amount of tax you would pay on every gallon of gas that your purchase. For instance, on March 17, 2022, Georgia’s state legislature put a bill into effect that suspended the 28.7 cents in tax that Georgians normally pay per gallon of gas. When that happened this immediately brought Georgia’s fuel costs per gallon down by that much. Suddenly instead of paying approximately $4.313 per gallon at the pump, Georgia residents are now only paying $4.026 (per AAA). 

That amounts to a $4.31 savings per fill-up. That may not seem like a lot, but to someone living paycheck to paycheck that could mean the difference between skipping a meal or not. On a larger scale, “This body has the opportunity to save Georgians near $157 million each month at the pump,” pointed out Republican state representative Jodi Lott. Georgia’s fuel tax holiday currently will remain in effect until May. 

Georgia lit the beacon and now other states are beginning to notice the light. At present, officials in over 20 states have submitted proposals that push for instituting a fuel tax holiday in their respective state legislatures. Connecticut’s state Governor Ned Lamont suggested that the state’s 25 cent gas tax be suspended until June. In Michigan, one of its republican state reps is calling for a pause on the 28 cent tax. 

However, should a fuel tax holiday pass in Maryland, folks there could see even bigger savings. Maryland’s fuel tax is set at 37 cents. A savings of 37 cents per gallon equates to a total savings of $5.55 for a person filling up a 15-gallon gas tank. Some states, where the fuel tax is as high as 50 cents, could see even bigger savings should a fuel tax holiday legislation pass. 

While a fuel tax holiday seems like a win all around, there are potential fallacies that could erupt for the seemingly beneficial legislation. Jeff Davis, who works at Eno Center for Transportation in Washington, D.C, pointed to the fact that “You’ve got to remember, the federal taxes are levied at the refinery.” What this means is that “…there’s no guarantee that that savings is going to be passed on through the wholesaler and then to the service station,” said Davis. 

Davis also turned public attention to the fact that tax money from fuel is most often delegated to covering costs associated with road and bridge repairs. Losing that tax money could mean poorer road quality down the line in some states. It’s clear that a fuel tax holiday is not the full-proof miracle solution that the American public could use right now. Still, “Temporary relief is better than no relief,” said Chicago resident Jessica Aguilar. At this point, it seems the public is willing to take what it can get.