A new transportation and budget review shows that California continues to have some of the highest gas taxes in the United States, with additional increases scheduled under existing state law. The report raises fresh concerns about affordability as fuel prices remain elevated and Californians continue facing some of the steepest cost-of-living pressures in the country.
California drivers currently pay more than 70 cents per gallon in state-related taxes and fees, including excise taxes, cap-and-trade costs, and environmental program surcharges. According to analysts, these combined charges add more than $10–$15 per fill-up for many commuters compared to drivers in lower-tax states.
Automatic Increases Already Scheduled
Under the state’s 2017 gas tax law, annual inflation adjustments continue to push fuel taxes higher each July. This means that even as residents struggle with rising utility bills, food costs, and housing prices, additional fuel tax increases are already built into the system.
“California lawmakers created a permanent upward tax escalator that hits working families the hardest,” the report notes. “These automatic increases occur whether household incomes rise or not.”
Impact on Working Families
For many Californians—especially those with long commutes—fuel costs now represent a significant portion of their monthly budgets. Small businesses in transportation, delivery, and trades report similar pressure, saying that higher fuel prices reduce margins and force higher prices onto consumers.
In rural counties, where driving distances are longer and transit options are limited, the burden is even greater.
Where the Money Goes
Although gas tax revenue is intended for transportation projects, critics argue that funds are often diverted to unrelated programs or stalled in bureaucratic delays. Several high-profile infrastructure projects have exceeded budgets or missed deadlines, deepening frustration among taxpayers.
Calls for Reform Grow
Following the new report, several lawmakers and taxpayer advocates renewed demands for a freeze on automatic gas tax increases, greater transparency in project spending, and an independent audit of transportation program efficiency.
Californians continue to pay more at the pump than almost anywhere else in the nation—yet many say they see little improvement in road conditions or traffic congestion.
Tax Freedom California will continue monitoring legislative proposals and transportation spending developments in the months ahead.
