California’s gas tax just went up. Here’s how much more you’ll pay at the pump
As of Tuesday, July 1, California drivers will pay a little more to fill up their tanks.
The state’s gasoline excise taxincreased from 59.6 cents to 61.2 cents per gallon — a change required by law and tied to inflation.
A separate policy update under California’s Low Carbon Fuel Standard is also now in effect, potentially pushing prices up slightly more in the months ahead.
Here’s a clear breakdown of what changed, why it matters and how much fuel will actually cost you:
What changed July 1?
The California Department of Tax and Fee Administration has implemented a new fuel tax rate:
Gasoline excise tax: increased from 59.6 cents to 61.2 cents per gallon
Diesel excise tax: increased from 45.4 cants to 46.6 cents per gallon
These annual fuel tax increases are automatically scheduled under SB1, a 2017 law passed to fund state infrastructure projects.
Rates are adjusted each July based on the California Consumer Price Index, which reflects inflation.
This is not a new tax, but a yearly inflation update built into the law. You won’t see it as a line item at the pump — it’s included in the total price you pay per gallon.
How much more will you pay for gas or diesel?
The 1.6 cent increase adds up slowly.
If you’re filling up a 15-gallon tank, you can expect to pay about 24 cents more before factoring in other statewide fees.
Remember: the excise tax is only one part of what you pay.
According to data from the U.S. Energy Information Administration, California drivers pay nearly 90 cents per gallon in total taxes, fees and climate program surcharges — the highest gas tax rates in the United States.
Despite that, prices can still go down due to oil market trends.
As of Monday, June 30, the average price of a gallon of regular gas in California was $4.59, down from $4.80 a month ago.
Why is California increasing fuel taxes?
The tax hike is the result of Senate Bill 1, also known as the Road Repair and Accountability Act. It was designed to ensure long-term funding for:
Road repairs and highway maintenance
Bridge safety upgrades
Public transit investments
Bicycle and pedestrian projects
The law includes annual inflation indexing to make sure revenues don’t lose value over time. These funds are constitutionally protected and cannot be diverted to non-transportation uses.
What about the Low Carbon Fuel Standard?
Along with the gas tax hike, amendments to California’s Low Carbon Fuel Standard officially take effect July 1, 2025.
The Low Carbon Fuel Standard program is overseen by the California Air Resources Board.
Adopted in 2009, the statewide fuel standard requires transportation fuel producers to reduce the carbon intensity of their fuels over time, either by blending in cleaner alternatives including renewable diesel, ethanol, or electricity or by purchasing credits from producers of low-carbon fuels.
According to the state Air Resourses Board, the latest changes:
Extend carbon reduction targets through 2045
Broaden the credit market to include cleaner fuels and additional transportation sectors, such as freight and aviation
Introduce mechanisms to stabilize the credit market, including a price ceiling and banking rules
These changes are aimed at accelerating California’s progress toward statewide emissions goals, while maintaining regulatory certainty for fuel producers.
How much could gas prices go up?
Some reports — including one from the Kleinman Center at the University of Pennsylvania — have projected that changes to the low carbon fuel standard could raise gas prices by as much as 65 cents per gallon.
But California Air Resources Board, the California Governor’s Office and academic experts say those numbers are significantly overstated.
“A price hike of that magnitude would certainly be problematic for many Californians,” Colin Murphy, co-director of the Low Carbon Fuel Policy Research Initiative at UC Davis, wrote in a blog post. “But the key question is: How likely is it that prices will actually jump that much? Answer: Not at all likely.”
Murphy explained that low carbon fuel standard credit prices have stayed well below the levels needed to drive major increases — and are expected to remain that way for years.
“Our analysis indicates there will be far more credits than required under the program for several more years at least, so the conditions that caused the low credit price will remain in effect,” he explained.
Rather than a dramatic spike, Murphy projects the new rules will add 8 or 9 cents per gallon in the coming weeks.
The state Air Resources Board’s estimate, based on input from “independent experts,” is similar: an increase of 5 to 8 cents per gallon.
How to save money at the pump
Here’s how to save money when you fuel up:
Compare prices before you go — Use tools including GasBuddy, AAA’s app or grocery store rewards apps to find the cheapest local gas stations.
Tap into store fuel discounts — Many supermarkets and wholesale clubs including Costco and Sam’s Club offer gas savings tied to your grocery purchases. These discounts can add up over time.
Join loyalty programs — Shell, Chevron, Kroger, Safeway and other companies have fuel rewards programs that typically save you a few cents per gallon.
Use cashback credit cards — Some cards offer 2% to 5% back on gas purchases. Just watch for any station surcharges that might offset the savings .
Bottom line: Shopping around and using these tools and programs can slash your fuel bill by 5 cents to 30 centers per gallon compared to average pump prices. That adds up fast.
This story was originally published July 1, 2025 at 11:11 AM with the headline "California’s gas tax just went up. Here’s how much more you’ll pay at the pump."
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