What would a gas tax holiday mean for Minnesotans?


With the average Minnesota gas price at 4.70 per gallon, and summer well underway people feel squeezed at the pump. Depending on their vehicle, it can cost drivers anywhere from $55 to $160 for regular gas.

Gas prices have increased in recent months. Policymakers have proposed , and in some states implemented – something known as a gas tax holiday. This provides temporary relief from gas taxes.

How much of your $50 gas bill goes towards taxes?

Where is the money going

Gas prices in the United States have increased precipitously over recent months. There are many reasons why gas prices have risen. The pandemic caused a slowdown in demand and reduced production. After the pandemic, life was largely back to normal which led to an increase in demand. As gas prices had stabilized earlier this year, Russia, a major oil producer, invaded Ukraine. This caused other countries to reduce their imports of Russian oil, which pushed up the price of the global commodity.

A midsize SUV with a 14 gallons tank and a $4.736 per gallon for AAA would cost $66.30. This is $26 more than what it would have cost to fill a year ago when the average Minnesota gas cost was $3.2863 per gallon.

How much is the gas tax?

Contrary to the state’s regular sale tax which is a fixed percentage of the purchase price, the state and federal gas taxes are equal per gallon, regardless of how much gas costs. It has not increased with gas prices.

Minnesotans pay 47 cents for every gallon of regular gasoline they buy. We pay 28.6 cents to Minnesota and 18.4 cents to the federal governments. This is 9.9% of the cost of an average gallon gas.

The Minnesota 28.6-cent gas tax is 28.5cs. This tax goes towards roads and bridges.

According to the state Constitution, “Nothing is possible by the Legislature (the Minnesota Department of Transportation), or anyone to move that money to other places than to highways,” Adeel Laari, director of innovative financing at the Humphrey School of Public Affairs’ Humphrey School of Public Affairs. Adeel Lari was previously employed at the Minnesota Department of Transportation.

Between 2016 and 2020, the state’s gas tax collection averaged $910 millions per year, according data by Lari and collaborators.

Lari stated that the Legislature uses a funding formula to determine where the revenue from the gas tax is going. The largest portion goes to state highways followed by counties and cities. A smaller amount is re-distributed.

Minnesota’s gas tax includes a.1cent per gallon inspection fee. Most of this fee helps pay for regulating gas sellers and monitoring gas supply, but a small percentage goes toward a program to help property owners increase energy efficiency, and another small part goes into the state’s general fund,
First implemented in 1932 by the federal gas tax, it goes towards highways and mass transportation. Since 1993, it has been 18.4c per gallon.

About average

Minnesota’s state gasoline excise tax remains the same as it was in 2012, following a gradual rise from 20 cents per gallon beginning in 2008.

Our 28.6 percent tax is close to the middle of other states’, according to data , compiled by Federation of Tax Administrators

California (56.6c) and Pennsylvania (56.7c) are at the top end. Alaska (8.95c span>) is at the bottom.

Minnesota’s gas tax, which is slightly lower than that of most neighboring states (except North Dakota) is 23 cents. The gas tax in Wisconsin is 32.9 Cents per gallon, while South Dakota’s and Iowa’s are respectively 30 and 30 cents.

While many states and the federal gas tax haven’t increased dramatically, even with inflation, some states
If a driver had the full benefit of a gas tax suspension and filled a 14-gallon SUV tank with gas, an annual state gas tax holiday would cost him $4. This is assuming he fills a tank with gas at current Minnesota prices. The federal gas tax holiday would cost the driver approximately $2.60.

A driver who fills up his tank once per week would save $26 or 9.8 percent on the $264 he would have to spend on gas at current prices.

Despite this, both sides of the aisle support temporary relief from gas taxes.

President Joe Biden requested that Congress suspend the 18.4 percent per gallon federal gasoline tax from this week to September. He also asked for revenues from other sources to compensate for highway fund losses.

There are also people who want a reprieve from the state’s gas tax: On Tuesdayspan styling=”font-weight 400 ;”>,, the Duluth News Tribune editorial board praised the Biden administration for supporting a gas tax holiday and lamented the low chances that Minnesota will do so.

Despite the support of some politicians from both sides, it would require a special session in order to pass a Minnesota gas tax holiday. The majority of people who are watching the Legislature don’t hold their breath.

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