What is the total federal and state tax on gasoline in California?

Ever wondered what you are paying in direct taxes for that gas? Image courtesy of Adobe Stock.

State tax on gasoline in California went up again on July 1. Have you been wondering what is the federal & state tax load on a gallon of gas in the state? I was. So I calculated it.

The total excise and sales tax load levied the federal and state level is 72.5 cents a gallon, which is 23.9% on top of the cost of gas.

On July 1, CNBC reported After tax hike, gas in California is now a dollar higher than the national average.

State excise tax went up 5.6 cents for each gallon bringing total state haul to 47.3 cents.

Oh, the 2017 bill that imposed the tax hike also contained an inflation adjustment.

Starting a year from now (7/1/20) the total state tax will increase annually based on the CPI. That is according to California Department of Tax and Finance (CDTFA). So a 2% increase will automatically increase the gas tax by just under a penny a gallon (0.95 cents) without the legislature having to go on the record and voting for another tax increase. A 3% inflation rate will automatically add 1.4 cents a gallon.

Remember that will be an annual tax increase.

Automatically. Without a vote.

Article cites a AAA report that average gasoline price in California is $3.755 compared to a national average of $2.717. That’s a dollar more in California than the average across the country. I saw that quite noticeably on a recent road trip to North Dakota. Outside the state, prices were drastically lower, by a dollar or more.

In addition, according to CDTFA the state of California imposes a 2.25% sales tax on gasoline.

I didn’t check to see if there is a local sales tax on gas. That would be another 0.25% or 1%.

Federal gas tax is 18.4 cents a gallon. Fast browse of articles from internet search shows that is rate mentioned in many places.

What is the total excise and sales tax load on gas in the state?

For a gallon of gas in California, you will pay $0.725 cents to the federal and state governments. The gas station will get $3.030 a gallon to cover their operations, distribution cost of the gas, refining costs, transportation, and cost to get oil out of the ground.

The direct taxes are 23.9%. That excludes the host of taxes levied on all the companies in every step of the upstream, midstream, and downstream production process.

Here is a quick recap:

Federal excise tax  $   0.184
State excise tax  $   0.473
state sales tax  $   0.068
total above taxes  $   0.725
cost of gas  $   3.030
average price in California  $   3.755
tax as percent of actual gas cost 23.9%


Here is my detail calculation:

price tax
average gasoline price in state      3.755
less federal excise tax      0.184      0.184
less state excise tax      0.473      0.473
average price without excise taxes      3.098
sales price plus sales tax   1.02250
sales price without sales tax      3.030
sales tax rate 2.25%
state sales tax      0.068      0.068
federal/state excise/sales tax      0.725
share of price you pay for gas:
paid to federal and state government      0.725
paid to gas station      3.030
excise and sales tax loads 23.9%

I am assuming the sales tax calculation is based on excluding the excise taxes. If my assumption is incorrect, that would increase the state’s cut by another 1.5 cents a gallon and increase the tax load to 24.5%.

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