Mercedes Mullins
California has some of the highest fuel tax rates in the US. In 2024, the state levied a tax of 68.1 cents per gallon of gasoline, which is over 10 cents more than the next highest rate in Illinois. California's fuel tax is made up of a combination of sales taxes, excise taxes, and taxes on wholesalers or retailers, which are passed on to consumers. The state's fuel tax rates are also affected by cap-and-trade carbon policies and low carbon fuel standards, which further increase the price of fuel. In addition to state taxes, consumers also pay a federal tax of 18.4 cents per gallon on motor fuels.
| Characteristics | Values |
|---|---|
| State with the highest tax rate on gasoline | California ($0.596/gallon) |
| State with the second-highest tax rate on gasoline | Pennsylvania ($0.576/gallon) |
| State with the lowest tax rate on gasoline | Alaska ($0.0895/gallon) |
| California's gas tax | 68.1 cents per gallon (cpg) |
| California's gas tax as a user fee | Yes |
| California's gas tax as a pollution deterrent | Yes |
| California's gas tax revenue | $53 billion in 2021 |
| California's gas tax rate in 2024 | 62.9 cents per gallon |
| California's gas tax rate in 2025 | $0.18 per gallon |
| California's gas tax payment | Last day of each month for the previous month |
| California's gas tax payment annually | Due once a year |
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What You'll Learn
California's gas tax is 68.1 cents per gallon
California has the highest tax rate on gasoline in the US at 59.6 cents per gallon, although one source states the rate is 62.9 cents. California's gas tax is 68.1 cents per gallon, which includes the prepaid sales tax. This is the highest in the US, with the lowest being in Alaska at 8.95 cents per gallon.
The state and federal excise taxes on fuel amount to about 13% of the cost of a gallon of gas. Excise taxes on fuel are implemented by every state and are also levied on alcohol and tobacco products. In California, fuel vendors are responsible for paying fuel excise taxes and passing on the costs to consumers.
California's gas tax is intended to serve as a user fee and a pollution deterrent. User fees are charges imposed by the government to cover the cost of providing a service, such as the construction and maintenance of roads. The state's carbon tax also increases the price of gasoline. The Low Carbon Fuel Standard is estimated to add about 12 cents to the price of gas, increasing to 47 cents in 2025.
California's gas tax is also affected by cap-and-trade carbon policies and low carbon fuel standards, which further increase the price of gasoline. These policies are in place to reduce carbon emissions and promote the use of alternative fuels.
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Excise taxes on fuel are implemented by every state
The federal government imposes an excise tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon for diesel fuel. This federal tax was last raised in October 1993 and has not been adjusted for inflation since. On average, state and local taxes add 34.24 cents to gasoline and 35.89 cents to diesel, bringing the total US volume-weighted average fuel tax to 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel.
In California, the state excise tax on aviation fuel is $0.18 per gallon, and $0.02 per gallon for jet fuel. California also imposes a tax on alternative fuel, with an excise tax of $0.18 per gallon, $0.06 per gallon of liquefied petroleum gas, $0.0887 for 5.66 pounds of compressed natural gas, and $0.1017 for 6.06 pounds of liquid natural gas.
In addition to these excise taxes, California also has carbon taxes, with the Low Carbon Fuel Standard estimated to add 12 cents to the price of gas, increasing to 47 cents in 2025. The state’s cap-and-trade program also adds an estimated 27 cents to the price of gas. These additional taxes make California the state with the largest additional burden on gas prices.
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California vendors pay fuel taxes, passing costs to consumers
California levies excise taxes on gasoline and diesel suppliers before they deliver fuel to retail stations. Excise taxes are imposed by both the state and federal governments. In California, vendors are responsible for paying fuel excise taxes and filing fuel tax reports with the state government. These taxes are then passed on to consumers in the retail price of fuel.
The state collects excise taxes from fuel vendors, who then pass the cost on to consumers in the form of higher fuel prices. The excise tax is a tax directly levied on certain goods, such as fuel, by the state or federal government. In California, the state collects these taxes from fuel suppliers before they deliver their products to retail stations. The diesel fuel tax revenue is deposited into the Motor Vehicle Fuel Account to pay for refunds authorised by the Diesel Fuel Tax Law. The remaining revenue is transferred to the Highway Users Tax Account and then to the State Highway Account. Local shares are also transferred to city and county road funds for the construction and maintenance of public roads and mass transit systems.
Federal excise tax rates on various motor fuel products are included in the Gasoline, Diesel/Kerosene, and Compressed Natural Gas rates. There is also a $0.1 per gallon charge for the Leaking Underground Storage Tank Trust Fund (LUST). In most areas, state and federal excise taxes amount to about 13% of the cost of a gallon of gas.
In California, aviation fuel is subject to a state excise tax of $0.18 per gallon, while jet fuel is taxed at $0.02 per gallon. Additionally, the state imposes excise taxes on alternative fuels, such as liquefied petroleum gas, compressed natural gas, and liquid natural gas, at varying rates. These taxes are ultimately passed on to consumers, who bear the cost of fuel taxes in the retail price of fuel.
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California's gas tax is the highest in the US
California has the highest gasoline tax rate in the US, at $0.596 per gallon or 62.9 cents per gallon (cpg) in 2024. This is in addition to the federal tax on motor fuels of 18.4 cents per gallon. The state's gas tax is subject to change due to cap-and-trade carbon policies or low-carbon fuel standards, which further increase prices.
California's gasoline tax is comprised of excise taxes on fuel, levied by both the state and federal governments. Excise taxes on fuel are implemented by every state and are also applied to alcohol and tobacco products. In California, the prepaid general sales tax is included in the state's per-gallon excise tax rate. The state also has additional taxes on alternative fuels, such as liquefied petroleum gas and compressed natural gas.
Fuel tax in California is paid by fuel vendors, who pass the cost on to consumers in the retail price of fuel. The taxes are due on the last day of each month for the previous month. Fuel producers and vendors are responsible for filing various fuel tax reports with the California government.
The high gas tax in California serves as a user fee, charging drivers for the construction and maintenance of the roads they use. It also acts as a pollution deterrent, with the intention of reducing emissions from gasoline use. The state with the lowest gasoline tax rate is Alaska, at $0.0895 per gallon or 8.95 cpg.
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California's gas tax is impacted by carbon tax policies
California has the highest gas tax rate in the US, at 68.1 cents per gallon. This rate does not include the effects of cap-and-trade carbon policies or low-carbon fuel standards, which further increase prices at the pump.
The state's carbon tax policies have been a subject of controversy, with some arguing that the potential impact on gas prices will harm working-class Californians. In response, the Air Resources Board has committed to prioritizing public health while also supporting working families, calling for frequent monitoring of the possible impact on gas prices.
Additionally, California's fuel excise taxes are paid by fuel vendors and passed on in the retail price. These taxes are imposed on the removal of motor vehicle fuel from terminals in California. The primary excise taxes on fuel in California are on gasoline, with an 18-cent tax per gallon of alternative fuel.
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Frequently asked questions
California levies a tax of 62.9 cents per gallon of fuel, which includes state excise taxes and any related taxes and fees that the consumer pays at the pump. This makes it the state with the highest tax rate on gasoline.
Fuel vendors pay the fuel excise taxes in California, but the taxes are passed on to the consumers in the retail price of the fuel.
The fuel tax is meant to function as a user fee, charging drivers to fund the construction and maintenance of the roads they drive on. It also serves as a pollution deterrent.
The fuel tax, combined with various fees, increases the price consumers pay at the pump. California also has additional carbon taxes, which further increase the price of fuel.
California has the highest tax rate on gasoline out of all the states. The next-highest per-gallon tax rates are in Pennsylvania, Washington, Illinois, and Maryland.
