How much savings drivers saw in 3 state breaks
President Joe Biden remarks on efforts to lower high gas prices at the Eisenhower Executive Office Building in Washington, D.C. on June 22, 2022.
Jim Watson | AFP | Getty Images
President Joe Biden has called on Congress to put a three-month federal gas tax holiday in place to help ease the financial pain drivers are experiencing at the pump.
With that, he is also asking state and local governments to provide additional relief.
The move comes as the average price per gallon of gas costs $4.93 per gallon, according to AAA, after recently topping $5 for the first time. One year ago, the average price per gallon was $3.08.
The federal gas tax amounts to 18.4 cents per gallon, or 24.4 cents per gallon on diesel fuel, which now costs an average of $5.81 per gallon.
In addition, states also impose their own levies on gas.
Gas tax holidays have already been implemented by several states, including Maryland, Georgia and Connecticut. In addition, New York recently began its own gas tax holiday on June 1, and Florida is slated to implement one starting Oct. 1. More states are also weighing some type of relief.
The three recent suspensions in Maryland, Georgia and Connecticut resulted in savings that were “mostly passed on to consumers at some point during the tax holiday in the form of lower gas prices,” according to a recent analysis by the Penn Wharton Budget Model at the University of Pennsylvania.
Yet experts say there are limits to just how much these temporary breaks may alleviate the costs drivers face.
How much state gas tax holidays helped drivers
The savings consumers saw from gas tax holidays in Maryland, Georgia and Connecticut varied by state, according to the Penn Wharton Budget Model.
In Maryland, up to 72% of the gas tax savings was passed on to consumers, the research found. In Georgia, the consumers savings portion ranged between 58% to 65%. And in Connecticut, it was between 71% to 87%. (Connecticut only applied the holiday to gasoline, and state tax on diesel fuel will actually increase by 9 cents a gallon on July 1 under legislation passed in 2007.)
Those price reductions were often not sustained during the entire holiday, the research found.
Now, New York has put a gas tax holiday into effect through the end of the year, suspending its taxes of about 16 cents per gallon. Florida is slated to give drivers a break from its 25 cents per gallon state tax throughout the month of October.
How much depends savings gets passed onto the consumer depends on supply and demand, according to Richard Prisinzano, director of policy analysis at the Penn Wharton Budget Model.
STATE GAS TAX HOLIDAYS
- MARYLAND
Gas taxes (per gallon): 36.1 cents on gas/36.85 cents on diesel
Suspension: March 18-April 16 - GEORGIA
Gas taxes (per gallon): 29.1 cents on gas/32.6 cents on diesel
Suspension: March 18-May 31 - CONNECTICUT
Gas taxes (per gallon): 25 cents on gas/No tax holiday on diesel
Suspension: April 1-June 30
The federal gas tax is paid by the refiner when the fuel leaves the…