Why California’s Gas Tax Just Hit a Record 63.4 Cents a Gallon

California’s gas tax hit a record 63.4 cents a gallon on July 1, and the increase is not the only one drivers felt at the pump this month. Washington state’s gas tax rose automatically for the first time in state history on the same day, and Indiana, Virginia and Michigan all adjusted their own fuel tax formulas in recent weeks. None of these charges show up as a separate line on a receipt. They are baked into the price posted on the sign, which is exactly why so many drivers do not realize how much of what they pay at the pump is tax rather than the cost of fuel itself.

California’s Gas Tax Climbs to the Highest Rate in the Country

California’s excise tax on gasoline rose 2.2 cents on July 1, bringing the rate to 63.4 cents a gallon, according to the state Department of Tax and Fee Administration. The diesel excise tax rose from 46.6 cents to 48.2 cents a gallon over the same period. The increase is automatic and tied to inflation under Senate Bill 1, the Road Repair and Accountability Act, which California lawmakers approved in 2017. The formula adjusts the rate every July 1 based on the California Consumer Price Index, with no additional vote required.

San Diego resident Colette Schenker told NBC 7 San Diego the increase changes how she plans her week. “I have to be careful about where I’m going and what I’m doing,” Schenker said. “If I’m going to drive a lot more during the week, I have to cut corners and cut costs with other expenses.” Fellow San Diego driver Irma Porter said filling her tank now costs around $60, and the extra cost has cut into money she would rather spend taking her grandson to Legoland or on other family outings.

Washington’s First-Ever Automatic Gas Tax Hike

Washington state’s gas tax went up 2% on July 1, marking the first time an automatic increase has taken effect under state law, according to the Washington Policy Center. State lawmakers passed House Bill 2711 on March 12, putting future gas tax increases on autopilot rather than requiring a separate vote each time. Washington’s gas tax had already climbed 6 cents a gallon in 2025, pushing the state total to 55.4 cents a gallon before this year’s automatic bump.

Washington drivers also pay roughly 50 cents a gallon in additional costs tied to the state’s Climate Commitment Act, on top of the federal fuel tax of 18.4 cents a gallon. Combined, Washington Policy Center transportation director Charles Prestrud said the state’s charges push pump prices more than a dollar a gallon above many other states. Prestrud argued the automatic increase removes the public’s chance to weigh in on future transportation budgets. Lawmakers no longer have to debate or vote on each individual hike.

What the Increase Actually Costs a Driver

The average American vehicle uses roughly 489 gallons of gasoline a year, based on U.S. Energy Information Administration consumption data divided across the country’s registered vehicle fleet. At that rate, California’s 2.2-cent increase adds about $10.76 a year to the average driver’s fuel bill, a modest figure on its own. The number is more significant as part of a pattern. California’s excise tax has climbed every July after Senate Bill 1 took effect in 2017, and state data shows drivers now pay 63.4 cents in state excise tax alone before federal tax and sales tax are added at the pump.

California and Washington are far from alone in tying gas taxes to a formula rather than a one-time legislative vote. Florida, Georgia, Minnesota, North Carolina, New York, Utah, Vermont, Maryland, Nebraska, Pennsylvania and West Virginia all have some form of automatic inflation-based adjustment written into state law, according to tax policy trackers that follow state fuel tax formulas. Supporters of indexing argue it keeps road funding stable without lawmakers having to cast a politically risky vote every year. Critics, including the Washington Policy Center, argue indexing removes the public’s ability to weigh in before a tax increase takes effect.

Other States Adjusting Fuel Taxes This Summer

California and Washington are not alone. Indiana, Virginia and Michigan all revised their fuel tax formulas around the same period this year, though each state uses a different method to calculate the charge. Michigan’s fuel excise tax jumped from 31 cents to 52.4 cents a gallon at the start of 2026, one of the larger single-year increases among the states that adjust fuel taxes on a set schedule. Virginia uses a hybrid system that combines a retail tax of 32.6 cents a gallon with a separate wholesale-level charge, so the rate a driver actually pays moves with wholesale fuel prices rather than a single fixed number.

Every state that raises its gas tax points to the same underlying problem: road and bridge maintenance backlogs that outpace the revenue collected from a tax charged per gallon rather than per mile driven. That mismatch is growing. California’s own data shows zero-emission vehicles accounted for nearly 23% of new vehicle sales in the state, and every driver who switches to an EV stops paying the gas tax that funds highway repairs, even though their vehicle still puts wear on the same roads.

What Drivers Can Do About It

State gas taxes are set by law and cannot be avoided by shopping around within a state, but drivers who cross state lines regularly can save real money by timing fill-ups. AAA’s Fuel Price Finder and apps such as GasBuddy track real-time prices by station and can show a driver whether it is worth waiting to fill up on the other side of a state line. Drivers can also cut total fuel spending by combining errands into fewer trips, keeping tires properly inflated, which improves fuel economy, and using a vehicle’s eco or fuel-saving drive mode on highway trips.

For drivers who want to track exactly how much tax they pay at the pump, the American Petroleum Institute publishes a full state-by-state breakdown of gasoline and diesel tax rates, updated each time a state changes its formula. Drivers who believe a specific fee or surcharge posted at a station looks unusual can also contact their state’s department of revenue or consumer protection office to confirm the charge is legitimate before raising a dispute with the station operator.

The broader trend is worth watching regardless of which state a driver lives in. As more vehicles run on electricity rather than gasoline, states are collecting less revenue from a tax structure built around gallons pumped, even as road and bridge maintenance costs keep rising with inflation. That mismatch is a big reason states have shifted toward automatic, formula-driven increases rather than one-time legislative votes. Some states, including Pennsylvania and Virginia, have also introduced separate annual road-usage fees specifically for electric and hybrid vehicle owners, aiming to recover some of the maintenance funding that a pure gas tax no longer captures as EV adoption grows.

Drivers who want an early warning before the next round of state fuel tax changes can check their state transportation department’s website each spring. Most annual adjustments are calculated using the prior year’s inflation data and announced weeks before they take effect on July 1 or January 1, depending on the state.

None of these increases are likely to reverse course. Road construction and repair costs have climbed alongside general inflation for years, and gas tax revenue has not kept pace in most states. The tax is charged per gallon rather than tied directly to the cost of materials or labor. Until states settle on a different way to fund roads, most likely a per-mile charge that applies evenly regardless of what a vehicle runs on, drivers filling up at the pump will keep absorbing the gap through gas taxes that climb a little more each year.

Sources:

• NBC 7 San Diego: California gas tax set to increase on July 1
• Washington Policy Center: Automatic hike to Washington gas tax hits for the first time
• Michigan Department of Treasury: Fuel Tax Changes
• Caltrans: Senate Bill 1, the Road Repair and Accountability Act