A new bill in California aims to temporarily suspend the state’s gasoline tax for one year, in an effort to address rising fuel costs. Assembly Bill 1745 was introduced by Assemblymember Jeff Gonzalez of Indio on February 9. If approved as an urgency measure by a two-thirds vote in the Legislature, it would take effect immediately.
California currently imposes the highest state gasoline tax in the United States, at about 61 cents per gallon. The tax is applied to every gallon of motor vehicle fuel that leaves a refinery or terminal, enters the state, or is sold within California. AB 1745 proposes suspending this tax for one year.
“Californians are suffering under the weight of our state’s affordability crisis. Families are paying more for food, housing and especially fuel, and they need a break,” Gonzalez told the California Post. “Suspending the state gas tax for a year would provide immediate relief at the pump, and lost revenue would be responsibly backfilled through the General Fund so critical infrastructure projects continue as planned.”
The bill includes measures to ensure that any savings from the suspended tax are passed directly to consumers at gas stations. Gas station operators who do not comply could face penalties for unfair business practices. Receipts would also be required to show how much tax would have been charged if not for the suspension.
Lawmakers argue that immediate action is necessary due to rising gas prices and affordability challenges faced by Californians. “Affordability should not be a partisan issue. I hope my colleagues from both parties will join me in prioritizing Californians,” said Gonzalez to the Post. “Voters sent me to Sacramento to fight for them and lower their cost of living, and that’s exactly what I’m doing.”
According to AAA data, California leads all states with an average gasoline price of $4.63 per gallon; Hawaii follows at $4.40, Washington at $4.35, Oregon at $3.91, Nevada at $3.70, Arizona at $3.25, Pennsylvania at $3.13 and Vermont at $3.00.
Recent volatility in global oil markets has contributed to price increases: U.S crude oil prices have risen by 7% while Brent crude is up by 8%. Earlier this year oil prices had already climbed by 17%. Christine Romans, senior business correspondent for NBC News, stated: “This will quickly translate into higher prices at gas stations for American drivers… A $1 increase in crude oil generally means up to two-and-a-half cents more per gallon of gasoline; so a quick calculation suggests a $10 jump could mean as much as 25 cents more per gallon.”
In addition to global market pressures, California is transitioning to its summer blend gasoline—a formulation intended to reduce evaporation during warmer temperatures but which costs more to produce than winter blends. Maintenance during this transition typically reduces supply and can cause seasonal price spikes.
Supporters of AB 1745 note that California’s cost of living is about 11% above the national average—driven largely by housing costs over 50% higher than elsewhere in the country—and argue that suspending the gas tax could offer meaningful short-term financial relief for working families.
The proposed legislation will move forward through committee hearings where it will require bipartisan support to achieve passage as an urgency measure.
