A California gas tax breakdown comes to about 89 cents per gallon in combined government charges before the fuel itself is priced in. That total includes an 18.4-cent federal excise tax, a 61.2-cent state excise tax, a partial sales tax that moves with the pump price, and several environmental compliance costs layered on top. Some pieces are fixed per-gallon amounts. Others rise and fall with fuel prices or carbon credit markets, which is why your total tax burden on a gallon shifts week to week.
What You Pay on a Gallon in 2026
Here is roughly what the taxes and fees look like on a gallon of regular gasoline in California during the first half of 2026, assuming a retail price around $4.50:
- Federal excise tax: 18.4 cents
- Federal Leaking Underground Storage Tank fee: 0.1 cent
- State excise tax: 61.2 cents
- State and local sales tax (2.25% state plus district taxes): roughly 10 to 18 cents depending on where you fill up
- Cap-and-trade compliance cost: roughly 20 to 30 cents
- Low Carbon Fuel Standard cost: roughly 5 to 10 cents
- Underground storage tank maintenance fee: 2 cents
- Oil spill prevention and administration fee: 0.2 cents
The fixed, known charges (federal tax, state excise, UST fee, and oil spill fee) add up to about 82 cents. The variable charges add another 35 to 58 cents depending on gas prices, your location, and the current carbon credit market. All told, taxes and regulatory costs account for somewhere between $1.17 and $1.40 of the price on a $4.50 gallon, or roughly a quarter to a third of what you pay at the pump.
The State Excise Tax Is the Biggest Piece
The largest single tax on a gallon of gas in California is the state excise tax, set at 61.2 cents per gallon for the period running July 1, 2025, through June 30, 2026.1California Department of Tax and Fee Administration. Sales Tax Rates for Fuels It’s a flat per-gallon charge collected from fuel distributors at the wholesale level and built into the retail price you see. It doesn’t move with the day-to-day price of gasoline.
What does move is the rate itself, once a year. Senate Bill 1, the Road Repair and Accountability Act of 2017, tied the excise tax to the California Consumer Price Index. Each July the California Department of Tax and Fee Administration recalculates the rate to keep pace with inflation. It was 57.9 cents for 2023–24, 59.6 cents for 2024–25, and 61.2 cents for the current period.1California Department of Tax and Fee Administration. Sales Tax Rates for Fuels Each annual increase has historically added between 1.5 and 2.5 cents per gallon.
Sales Tax on Gasoline
On top of the excise tax, gasoline is subject to a percentage-based sales tax. California’s general sales tax is 7.25%, but gasoline gets a partial exemption that brings the state portion down to 2.25%.1California Department of Tax and Fee Administration. Sales Tax Rates for Fuels Local district taxes stack on top of that 2.25%, and those vary by county and city. In some parts of the state, the combined sales tax rate on gasoline can approach 5% or more once district taxes are included.
Because it’s a percentage, this tax rises when gas prices rise. A jump from $4.00 to $5.00 per gallon means you’re paying more in sales tax even though the rate hasn’t changed.
California collects most of this tax through a prepayment system. Fuel suppliers pay a flat prepayment to the state at the time the excise tax is imposed, currently 7.5 cents per gallon for the 2025–26 fiscal year.2California Department of Tax and Fee Administration. Sales Tax Prepayment Rates for Fuels The prepayment moves through the distribution chain, and the retailer reconciles it against the actual sales tax owed based on the pump price. By the time you pull up to the station, the sales tax is already in the posted price.
Cap-and-Trade and the Low Carbon Fuel Standard
California’s climate programs add costs that don’t exist at this scale in other states. They aren’t technically taxes, but they behave like taxes at the pump because fuel suppliers pass compliance costs through to consumers.
The cap-and-trade program requires fuel suppliers to buy carbon emission allowances at state-run auctions, one allowance per metric ton of greenhouse gas emissions. A 2023 analysis by the state’s Independent Emissions Market Advisory Committee estimated the program added about 26 cents per gallon when allowances traded around $33 per metric ton, and could reach 42 cents at roughly $54 per ton.3IEMAC. Assessing the Affordability Implications of California’s GHG Cap and Trade Program Auction prices fluctuated in the mid-to-high $20s through late 2025, putting the per-gallon impact in the neighborhood of 20 to 30 cents for most of 2026. This is the hardest component to pin down because it shifts with every quarterly auction.
The Low Carbon Fuel Standard requires fuel producers to reduce the carbon intensity of their products over time. Producers who can’t meet the targets buy credits from cleaner fuel providers, and that cost gets passed to drivers. Data from the California Air Resources Board, based on self-reported figures from producers, showed a cost pass-through of 8 to 10 cents per gallon before the program’s July 2025 update.4California Air Resources Board. LCFS – Saving Californians Money and Cutting Pollution After the updated targets took effect, researchers at UC Davis estimated the cost at 5 to 8 cents per gallon.5California Air Resources Board. CARB Announces Latest LCFS Updates Will Be Implemented Next Month
The Federal Excise Tax
Every gallon of gasoline sold in the United States carries a federal excise tax of 18.4 cents. The rate has not changed since 1993 and isn’t adjusted for inflation. Revenue goes to the Highway Trust Fund, which pays for highway construction, maintenance, and mass transit projects nationwide. A separate 0.1 cent per gallon goes to the Leaking Underground Storage Tank Trust Fund, bringing the total federal charge to 18.5 cents.6Congressional Budget Office. Increase Excise Taxes on Motor Fuels and Index Them for Inflation
Because the rate is frozen at its 1993 level, it has lost more than half its purchasing power to inflation. That’s part of why California’s own excise tax moved to inflation indexing.
Smaller Per-Gallon Fees
A flat fee of 2 cents per gallon funds the Underground Storage Tank Cleanup Fund, which pays for remediating fuel leaks and helping tank owners meet federal financial responsibility requirements.7California Department of Tax and Fee Administration. Underground Storage Tank Maintenance Fee – Overview
California also charges an Oil Spill Prevention and Administration fee on crude oil and petroleum products. As of July 1, 2025, the rate is 9.6 cents per barrel, which works out to roughly 0.2 cents per gallon.8California Department of Tax and Fee Administration. Oil Spill Prevention and Administration Fee
Where the State Excise Tax Money Goes
California’s constitution requires revenue from state fuel taxes to be spent on transportation. Voters reinforced that restriction in 2018 by passing Proposition 69, which amended the constitution to prevent the legislature from diverting SB 1 revenue to non-transportation purposes or lending it out.9California Secretary of State. Prop 69 Analysis – Past Voter Information Guides The money is deposited into the Highway Users Tax Account and used for road construction, maintenance, and related purposes.10California Department of Tax and Fee Administration. Motor Vehicle Fuel Tax Law – California Constitutional Provisions
Projected annual SB 1 revenue breaks down roughly as follows, based on Caltrans budget projections through fiscal year 2026–27:11California Department of Transportation. Senate Bill 1 Revenues
- $3.5 billion to the Road Maintenance and Rehabilitation Account, covering bridge and culvert repairs, the Active Transportation Program, local partnership projects, and a split between state highway improvements and local road funding
- $1.6 billion distributed directly to cities and counties for local streets and roads through formula-based allocations
- $827 million to the Public Transportation Account for transit capital projects, state transit assistance, and state rail assistance
- $651 million to the State Highway Account for State Highway Operation and Protection, the State Transportation Improvement Program, and the freeway service patrol
- $354 million to the Trade Corridor Enhancement Account for goods-movement corridors
Local road funding gets a bigger share than many drivers realize. The $1.6 billion going directly to cities and counties, plus the local share of the Road Maintenance and Rehabilitation Account, means a significant portion of what you pay at the pump goes to repaving streets in your own community rather than to state freeways.
If You Use Gas Off-Highway
If you burn gasoline for farming, off-road equipment, or other business purposes that don’t involve driving on public highways, you can claim a federal tax credit of 18.3 cents per gallon on your income tax return using IRS Form 4136. The credit is refundable, so you get the money back even if you owe no federal income tax.12Internal Revenue Service. Credit for Federal Tax Paid on Fuels It essentially refunds the federal highway excise tax on fuel that never touches a public road. For farms and construction operations burning hundreds of gallons a month in equipment, it’s worth tracking.