MW These states are considering gas-tax holidays. Here's how much drivers could save.
Andrew Keshner
Georgia's 60-day pause on its state gas tax could drop prices by 25 cents per gallon, one estimate says
Will states dust off the idea of a pause on gas taxes to help drivers? Georgia enacted a gas-tax holiday, and lawmakers in other states are weighing similar measures.
With average gas prices approaching $4 a gallon on Monday, one question for drivers is whether they'll soon get a break from gas taxes.
Georgia was the first state to pause its gas tax, as energy markets try deciphering the next chapter in the conflict with Iran. On Friday, Gov. Brian Kemp suspended the tax, which levies 33.3 cents per gallon of gasoline, for 60 days. The move also paused the 37.3 cent-per-gallon tax on diesel, which matters for businesses' expenses - and for their customers.
Georgia pump prices dropped approximately 15 cents a gallon from Thursday - the day before Kemp signed the bill - to Monday, according to Patrick De Haan, head of petroleum analysis at GasBuddy. But due to price increases at the wholesale level, drivers may not see a full 33-cent reduction on prices at the pump, he added.
Georgia drivers could ultimately see their prices fall by around 25 cents a gallon overall, according to the Penn Wharton Budget Model. The break will cost the state an estimated $370.2 million in missed-out tax revenue, its analysis said.
What other states are considering gas-tax holidays?
In Connecticut, Gov. Ned Lamont has said he supports a suspension of that state's gas tax. In Maryland, certain Republican legislators back the idea. In California, where gas was $5.79 a gallon on average as of Monday, some gubernatorial candidates have called for halting the tax. And on Capitol Hill, a Democratic bill introduced this month called for the suspension of the 18.4-cent federal gas tax through September.
But generally speaking, drivers elsewhere shouldn't get too excited about their own state copying the tax-holiday tactic.
Roughly four years ago, some states paused their gas taxes to try taking the edge off spiking gas prices after Russia invaded Ukraine. Georgia, Connecticut and Maryland all temporarily halted their state gas taxes then.
So did New York and Florida. Illinois, Colorado and Kentucky paused scheduled increases.
But with another surge in oil prices upon us, gas-tax holidays seem "unlikely to have the same breath of appeal as last time," said Jared Walczak, senior fellow at the Tax Foundation. Though gas-tax holidays resulted in some savings for drivers, the impact only went so far - and state tax coffers are not as flush as they were several years ago, he added.
This year, the average state gas tax is 28.6 cents per gallon, according to the Energy Information Administration. It was 26 cents per gallon in January 2022, according to EIA.
Florida Gov. Ron DeSantis, a Republican, has said he's skeptical that a gas-tax holiday now will make a difference for drivers, though state Democratic legislators have called for one.
When states paused gas taxes in 2022, the discount didn't fully pass on to drivers, said Kent Smetters, faculty director of the Penn Wharton Budget Model. On average, only around 72% of the gas-tax reduction was passed along to drivers, he said.
One reason gas-tax holidays have a muted impact is that gas taxes aren't a big factor in the overall price consumers pay for gas. In January, taxes accounted for 18% of the cost of a gallon of gas, while the cost of oil was 51%, according to the U.S. Energy Information Administration.
On Monday, oil prices fell 10% after President Donald Trump said he was holding off on threatened strikes on Iranian power plants and energy infrastructure for five days after "productive conversations" with Iran.
Where gas-tax pauses are getting a look, state legislators and governors say any savings are worth it - even if fighting in the Middle East concludes. The support doesn't always follow party lines.
In Maryland, Delegate Jason Buckel, the House minority leader, is one of the state's Republicans seeking a pause on the state's 46-cent tax. "We are asking for Maryland to pause the state retail gas tax for between 15 and 30 days in light of the strain on consumers caused by the disruption in global oil markets," Buckel told MarketWatch.
A spokesperson for Maryland Gov. Wes Moore rejected the idea of suspending the tax, according to a WTOP report. The governor's office did not immediately respond to MarketWatch's request for comment.
But in Connecticut, Lamont, a Democrat, is seeking to pause the state's 25-cent tax. A spokesperson for Lamont said the governor "suggested a smart and strategic pause to the state's gas tax as an appropriate measure to reduce the harm caused by high gas prices on motorists."
If the state tax was suspended, Connecticut gas prices could fall by about 18 cents a gallon over two months, according to Smetters. It would cost the state almost $81 million, he said.
Gas-tax pauses are "largely symbolic" gestures that don't really help drivers, Carl Davis, research director of the left-leaning Institute on Taxation and Economic Policy, said in a Monday brief. States losing out on the revenue from gas tax means less money for infrastructure projects that would help motorists, he said.
For example, pausing the federal gas tax would cost $2.4 billion a month, he said. But a household making less than $53,000 would only pocket an extra five bucks a month from the pause, Davis said.
Join Don't Short Yourself Live to ask MarketWatch's Beth Pinsker your Roth IRA questions on Wednesday, March 25, at 1:30 p.m. Eastern time.
-Andrew Keshner
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 23, 2026 17:17 ET (21:17 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments