5 things to know about N.C.’s fuel tax relief proposal

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Southpoint AccessWes Platt

House Speaker Destin Hall and Senate leader Phil Berger say they’ve agreed to call state lawmakers back to Raleigh to address high fuel prices. Their Oct. 3 statements called for relief for families and farmers, but didn’t spell out a bill, a tax cut or a session date. Here’s what SoDu drivers should know:

1. There’s no detailed proposal yet

Hall and Berger say they want lawmakers to consider fuel-cost relief. They haven’t said whether that means suspending the state fuel tax, cutting it by a set amount or taking another approach. As of Monday, Oct. 5, they hadn’t announced when the special session would meet.

2. A full tax suspension would equal $6.15 on a 15-gallon fill-up

North Carolina’s motor fuels tax is 41 cents per gallon this year. If lawmakers suspended the entire tax and every cent came off the pump price, a driver buying 15 gallons would save $6.15. That’s the best-case math, not a promise about what drivers would actually save.

SoDu Fuel Tracker | South Durham Gas Prices Today

Checking gasoline prices at tracked stations around South Durham.

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3. Savings could be smaller, and they might not show up right away

The tax is collected before fuel reaches the pump. Gas stations may still be selling fuel they bought with the tax included. A study of 2022 tax holidays in Maryland, Georgia and Connecticut found that an estimated 58% to 87% of the tax cut reached consumers, depending on the state. The savings also didn’t always last through the full tax holiday.

Effects of a State Gasoline Tax Holiday | Penn Wharton Budget Model

We provide causal evidence that recent suspensions of state gasoline taxes in three states were mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices: Maryland (72 percent of tax savings passed onto consumers), Georgia (58 percent to 65 percent) and Connecticut (71 percent to 87 percent). However, these price reductions were often not sustained during the entire holiday.

Penn Wharton Budget ModelZheli He and Xiaoyue Sun

4. A tax cut could leave less money for roads

Fuel taxes help pay for North Carolina’s transportation system. NCDOT reported that the motor fuels tax provided 47% of state transportation funding in fiscal 2024. Lawmakers could replace lost revenue with money from another source, as Ohio plans to do during its 90-day tax suspension. Otherwise, transportation programs could have less money to spend. North Carolina’s leaders haven’t said how they’d handle the loss.

5. Other states are trying different kinds of relief

Georgia has suspended its motor-fuel tax through Oct. 29, and Indiana has extended its gas-tax suspension through Nov. 4. Ohio enacted a 90-day suspension of its gasoline and diesel taxes. Utah cut its fuel tax by 6 cents per gallon through the end of the year. Illinois and Kentucky delayed scheduled tax increases instead of suspending their taxes. Some states have offered narrower relief for farmers and other users of dyed diesel.

For SoDu drivers, a tax break could trim the cost of commuting, school trips and errands for a while. How much it saves, when drivers see the change and what happens to road funding will depend on the plan lawmakers haven’t released yet.

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