Gas Tax Holiday: How much would drivers save without federal taxes?

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As the world returns to normal following the COVID-19 pandemic, the price of gas has shot up drastically. Adding to the woes of everyday consumers, is Russia’s invasion of Ukraine, with the resulting sanctions on Russian oil imports further affecting gas prices across the United States.

In order to combat the rapidly increasing prices, several states have introduced a Gas Tax Holiday, which involves temporarily pausing the state imposed taxes on gas prices.

While there were fears that the difference would be eaten up by either oil producers or the gas stations, by the University of Pennsylvania’s Wharton School of Business has indicated otherwise.

“We provide causal evidence that recent suspensions of state gasoline taxes in three states were mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices: Maryland (72 percent of tax savings passed onto consumers), Georgia (58 percent to 65 percent) and Connecticut (71 percent to 87 percent). However, these price reductions were often not sustained during the entire holiday,” the study summarized.

States with a gas tax holiday

The below states have implemented a gas tax holiday for residents.

Maryland

The state of Maryland was the first to suspend its gas tax, with consumers saving 36-cent-a-gallon on gasoline and 37-cent tax on diesel.

Georgia

Georgia implemented its suspension on May 31, with consumers saving 29.1 cents a gallon on gasoline and 32.6 cents per gallon on diesel.

Connecticut

In Connecticut consumers have benefitted anywhere from 71-87 percent since Governor Ned Lamont introduced a Gas Tax Holiday in March.

New York

The powers that be in New York suspended the state’s 8 cent fuel tax and an 8 cent sales tax between June 1 and Dec. 31, which is estimated to save consumers 16 cents a gallon.

Florida

Governor Ron DeSantis recently announced Gas Tax Holiday with the state lowering prices by 25.3 cents a gallon on October 1, 2022.

California

While efforts to suspend the 51 cent gas tax ultimately failed, a portion of the state’s diesel tax has been suspended, saving consumers 23 cents per gallon.

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