Calif. gas tax set to rise on July 1, cementing highest rates in U.S.

California motorists will face another increase in expenses at the pump starting July 1, 2026, as the state’s excise tax on gasoline is scheduled for its annual upward adjustment.

Under the state’s framework, the gasoline excise tax will rise from 61.2 cents per gallon to 63.4 cents per gallon. The diesel tax will increase from 46.6 cents to 48.2 cents per gallon. California maintains the highest state fuel taxes in the country.

This incremental increase stems from the Road Repair and Accountability Act of 2017, known as Senate Bill 1. Designed to fund infrastructure repairs, highway expansions, and mass transit upgrades, SB 1 mandated that fuel taxes adjust automatically each July 1 based on changes in the California Consumer Price Index.

Since implementation, the base excise tax has more than doubled from its pre-SB 1 baseline of approximately 27.8–30 cents per gallon.

 

The 2.2-cent excise tax hike represents only a portion of the total taxes and fees applied to gasoline in California. When combined with state and local sales taxes, the cap-and-trade program, underground storage tank fees, the Low Carbon Fuel Standard (LCFS), and other charges, these policies add a substantial premium — often estimated in the range of $1.15–$1.20 or more per gallon depending on market conditions and methodology.

Critics, including Republican lawmakers, have called for suspending the adjustment, maintaining that the cumulative burden disproportionately affects working-class families and small businesses, especially during peak summer travel.

On the “Hidden Tax” / Costs to Working Families

 

Republican lawmakers frequently highlight that the LCFS acts as an invisible surcharge that disproportionately hits low- and middle-income drivers.

 

“Central Valley families are already feeling the strain of California’s high cost of living, and they can’t afford to pay an extra 71 cents per gallon every time they fill up their tanks. California drivers pay almost $2 more per gallon than the national average, yet [Democrat] Governor [Gavin] Newsom continues to advance policies that will drive prices even higher,” says Representative David Valadao (R-Calif.).

“These price changes aren’t driven by global oil markets, they result from policy decisions made right here in Sacramento. … Economists predict these changes could increase gas prices by up to 65 cents per gallon or more — all without a clear plan to protect working families or small businesses,” remarked a representative from the California Fuels & Convenience Alliance.

 

“The increase is coming at an economically challenging time… higher fuel prices can lead to potential increases in everyday costs like groceries. While other states have suspended gas taxes, at least temporarily, during periods of higher fuel prices, California continues down a path of increasing the burden,” said state Senator Tony Strickland (R-Huntington Beach).

Proponents, including Democrat state officials and environmental advocates, defend the structure as “essential for maintaining infrastructure and advancing climate goals.” They claim that programs like the LCFS will eventually reduce the carbon intensity of fuels and support long-term transition to lower-emission options.

Recent data shows California’s average retail gasoline price around $5.45–$5.60 per gallon in late June 2026, roughly $1.50–$1.65 above the national average, reflecting a combination of taxes, regulatory costs, refining expenses and market factors.