Mercedes Mullins
California has the highest tax rate on gasoline in the United States. As of 2024, the gas tax in California was 68.1 cents per gallon, with the rate increasing to 61.2 cents per gallon on July 1, 2025. The state's gas tax is meant to function as a user fee, charging drivers to fund the construction and maintenance of roads, highways, bridges, and transportation infrastructure. California also has additional carbon taxes that further increase the price of gasoline, such as the Low Carbon Fuel Standard (LCFS), which aims to reduce the use of high-carbon fuels and promote cleaner alternatives. These taxes and fees make California's fuel prices among the highest in the country.
| Characteristics | Values |
|---|---|
| Gas tax rate in California | 68.1 cents per gallon (as of January 2024) |
| Gas tax rate in California (2025) | 61 cents per gallon (as of July 1, 2025) |
| Gas tax rate in California (2024) | 59.6 cents per gallon |
| State with the highest tax rate on gasoline | California |
| State with the lowest tax rate on gasoline | Alaska |
| Impact of LCFS on gasoline prices | 17-23 cents per gallon (as of 2025) |
| Impact of LCFS on gasoline prices (2024) | 9-14 cents per gallon |
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What You'll Learn
California's gas tax is 61.2 cents per gallon
California has the highest tax rate on gasoline in the United States. As of July 1, 2025, the gas tax in California rose to 61.2 cents per gallon, up from 59.6 cents. This increase has been in effect since the gas tax was enacted into law by voters in 2018. The funds from the tax are used to support highway, road, bridge, and active transportation infrastructure projects. Californians already face the highest gas prices in the country, with an average of $4.62 per gallon, according to AAA.
The gas tax in California is intended to function as a user fee, charging drivers to fund the construction and maintenance of the roads they drive on. In addition to the gas tax, California also has the largest additional burden on gas prices via carbon taxes. The Low Carbon Fuel Standard (LCFS), which took effect on July 1, 2025, is expected to increase the price of gasoline by 17-23 cents per gallon, according to the California Air Resources Board (CARB).
The LCFS is a regulation designed to reduce the use of high-carbon fuels and promote the transition to cleaner alternatives through a credit trading system. The exact impact of the LCFS on gasoline prices is difficult to predict as the credits are traded on a market, and the price can fluctuate. However, opposition to the LCFS points to research that suggests retail gasoline prices could increase by as much as 65 cents if the LCFS credits reach their highest allowable cost levels.
California's high gas taxes are also influenced by the state's environmental programs and taxes, which further drive up the price of gasoline. The range of gas tax rates across the country becomes even wider when incorporating these factors. While California has some of the highest fuel prices in the country, it's important to note that gas taxes vary widely across states, and the federal government also places a tax on gasoline sold in the country.
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Gas tax funds infrastructure projects
Gas taxes are intended to serve as user fees and pollution deterrents. In California, the gas tax rate is 68.1 cents per gallon, the highest in the US. The state also has additional carbon taxes, which further increase the price of gas. These taxes are meant to fund the construction and maintenance of roads, with the money going towards improving road safety conditions and expanding transportation options.
In June 2025, California announced nearly $5 billion in funding for infrastructure projects, with nearly $2.44 billion coming from the state's Road Repair and Accountability Act of 2017, which uses gas-tax money. This funding will be used to improve state highways, expand bus, train, and clean transportation services, and increase pedestrian and bicycle travel options.
The Trade Corridor Enhancement Program (TCEP) will receive $810 million to improve freight movement and reduce toxic pollution by decreasing the time trucks, cars, and trains sit idle and by rerouting tractor-trailers. $1.45 billion will go towards zero- and low-emission transportation and new infrastructure to strengthen California's freight network and better connect marine ports with railyards and freight corridors.
Other projects receiving funding include $483 million for passenger rail extensions, bicycle and pedestrian safety, and rapid transit bus expansion, and $202 million for the Local Partnership Competitive Program to upgrade rail, transit, bicycle, and pedestrian facilities. $63 million will be used to improve the Ramona Expressway in Riverside County, including a new bridge, bike lanes, and a wildlife crossing. $49 million will be used to build charging hubs in Fresno, Oakland, Ontario, and San Diego to support clean medium- and heavy-duty truck fleets.
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Aviation fuel and jet fuel taxes fund FAA operations
In California, aviation fuel is taxed at a state excise rate of $0.18 per gallon, whereas jet fuel is taxed at a rate of $0.02 per gallon. These taxes are imposed on the removal of motor vehicle fuel from a terminal in California. The revenue generated from aviation fuel taxes is used to support state aviation programs and airport operations.
The Federal Aviation Administration (FAA) plays a crucial role in ensuring that funds collected from aviation fuel taxes are utilised for airport purposes. In 2017, the FAA requested that state and local governments submit action plans detailing the allocation of revenue from aviation fuel taxes towards airport-related expenditures. This initiative aligns with the requirement that airport revenues be directed towards capital and operating costs associated with airports and local facilities directly connected to air transportation.
State aviation fuel taxes contribute significantly to the funding of state aviation programs. In Colorado, for example, aviation fuel tax revenue is utilised by the Division of Aeronautics and the Colorado Aeronautical Board to support, develop, and maintain the state's aviation system. This allocation of funds ensures a dedicated source of financing for aviation-related infrastructure and services.
Additionally, aviation fuel taxes at the federal level, such as the Federal Excise Tax (FET), also contribute to funding aviation-related operations. The FET is credited to the Highway Trust Fund, and a portion of it is transferred to the Airport and Airway Trust Fund based on the gallons of fuel used in aviation. While some exemptions and suspensions to the FET exist, such as during the COVID-19 pandemic, it generally applies to commercial operators and aircraft owners.
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California has the highest gas tax in the US
California's high gas tax rates are due in part to the state's environmental policies, such as the Low Carbon Fuel Standard (LCFS), which aims to reduce the use of high-carbon fuels and promote cleaner alternatives through a credit trading system. The impact of the LCFS on gasoline prices is predicted to be around 17-23 cents per gallon, contributing to the overall high cost of fuel in the state.
The gas tax in California is intended to function as a user fee, charging drivers for the use of roads, highways, bridges, and transportation infrastructure. These taxes are invested back into the construction, maintenance, and repair of such infrastructure. While this is a common practice across states, California's gas tax stands out for its notable environmental focus, with carbon taxes adding a significant burden to gas prices.
The high gas tax rates in California have led to the state also having some of the highest fuel prices in the country. Californians already face the highest gas prices in the nation, with an average of $4.62 per gallon, and these prices are expected to continue rising due to regulatory changes and the implementation of environmental programs. The combination of high gas taxes and environmental initiatives creates a unique situation in California, resulting in a significant financial burden on drivers and contributing to the state's reputation for high living costs.
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Gas tax is a user fee
California has the highest gas tax rate in the United States at 68.1 cents per gallon. Gas taxes are intended to serve as user fees and pollution deterrents. A user fee is a charge imposed by the government for the primary purpose of covering the cost of providing a service, directly raising funds from the people who benefit from the particular public good or service being provided. User fees are not taxes, although some taxes may be labelled as user fees or closely resemble them. User fees are a way to attribute the costs of government services to the people who use them, avoiding charging people taxes for things they do not want or use.
Transportation services particularly benefit from a user-fee pay structure. For example, about 60% of federal gas taxes are used for highway and bridge construction, with the remaining 40% going to earmarked programs, including a minority for mass transit projects. Gas taxes and user fees paid by drivers are not high enough to cover the full cost of road-related spending. However, critics of gas tax increases argue that much of the revenue is diverted to other government programs and debt servicing unrelated to transportation infrastructure.
With the increasing prominence of electric vehicles and general improvements to vehicle fuel efficiencies, the gas tax’s ability to be an effective user fee for road use is steadily diminishing. Many states have considered replacing their gas taxes with vehicle miles travelled (VMT) taxes instead, using actual miles driven as the metric for the user fee instead of gas consumed. If properly calibrated, this would eliminate the non-neutral treatment of vehicles with different fuel efficiencies, align roadway revenues to expenditures, and ensure that drivers are the ones paying for the roads in the future. Some states have explored environmental taxes or carbon taxes, which would also impact the price of gas at the pump.
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Frequently asked questions
As of July 1, 2025, California's gas tax is 61.2 cents per gallon.
California has the highest tax rate on gasoline in the United States.
California's fuel tax rates are influenced by the state's environmental programs and taxes, such as the Low Carbon Fuel Standard (LCFS) and cap-and-trade policies, which aim to reduce carbon emissions and promote cleaner energy alternatives.
The fuel tax, along with other taxes and fees, contributes to California having some of the highest fuel prices in the country. The taxes are invested back into infrastructure projects, such as highways, roads, and bridges.
Aviation Gasoline used to propel aircraft is exempt from sales tax unless it is Aircraft Jet Fuel. Dyed Diesel is also exempt from Excise Taxes unless it is used on highways.
