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June 30, 2015 - Sacramento – The California State Board of Equalization (BOE) announces the state excise tax on gasoline will drop by six cents per gallon on July 1, 2015. This will lower the excise tax rate from 36 cents to 30 cents per gallon.

“The lower rate is welcome news for overtaxed Californians who pay higher gas costs than residents of nearly every other state,” said Vice Chair George Runner. “It’s especially good timing for anyone hitting the roads this weekend.”

The Board approved the six cent tax rate reduction at its February 2015 meeting. The 30 cent per gallon rate will remain in effect until June 30, 2016.

While Californians will pay less in state excise tax on gasoline starting July 1st, this may not necessarily translate to lower overall prices at the pump. Other factors, such as world crude oil prices and supply and demand, also affect gasoline prices.

The BOE is tasked with annually adjusting the state excise tax rate on gasoline by March 1st of each year, after passage of 2010 laws known as the “fuel tax swap.” The new laws lowered the statewide sales tax rate on gasoline to 2.25 percent and raised the excise tax rate so that the total amount of tax revenue generated is equal to what would have been generated had the sales and use tax and excise rates remained unchanged. 

The excise tax rate for the coming fiscal year is based on estimates of the projected average price of gasoline and number of gallons to be purchased. The difference between the projected and actual revenue collected from the prior fiscal year is then subtracted from the coming year projection to arrive at the upcoming rate.
Source: BOE