Truckers Get Relief: States Cutting Fuel Taxes as Pump Prices Climb
Lawmakers in Pennsylvania and several other states are considering fuel-tax reductions or suspensions as elevated gasoline and diesel prices increase operating costs for truckers, farmers and other commercial users. Pennsylvania’s diesel tax currently stands at 74.1 cents per gallon, one of the highest state fuel-tax rates in the country.
Pennsylvania Bills Would Suspend Fuel Taxes
Pennsylvania’s fuel taxes are adjusted automatically each January under state law. The current gasoline tax is 57.6 cents per gallon, while the diesel tax is 74.1 cents per gallon.
Several bills under consideration would establish a temporary fuel-tax holiday. For trucking companies and owner-operators, suspending the diesel tax could reduce the amount charged on every gallon purchased during the relief period.
Tax Foundation excise tax policy director Adam Hoffer said most of the savings from a fuel-tax holiday would likely reach consumers through lower pump prices. He estimated that approximately 80% to 90% of a tax reduction could be reflected in retail prices, with the remaining savings going to suppliers and producers.
States Consider Similar Relief
Georgia, Kentucky and Indiana have either reduced or suspended fuel taxes, while similar proposals have been discussed in Ohio and Massachusetts. In Georgia, Gov. Brian Kemp issued an emergency declaration and executive order suspending the state’s motor-fuel excise tax from March 20 through June 2.
Massachusetts Gov. Maura Healey also announced plans to file legislation seeking a two-month suspension of the state’s gasoline tax. Other proposals have called for suspending both state and federal fuel taxes, although federal changes would require action by Congress.
Some lawmakers have also proposed programs aimed specifically at farmers and truckers, including temporary diesel relief and a pause on diesel exports. The measures remain subject to legislative approval unless enacted through existing emergency authority.
Diesel Costs Hit Independent Truckers
Higher fuel prices have placed particular pressure on owner-operators, who are responsible for purchasing fuel and covering the other costs associated with owning or leasing their trucks.
The Owner-Operator Independent Drivers Association said diesel is one of the largest operating expenses for owner-operators. The organization also noted that small-business carriers account for more than 90% of trucking companies in the United States and are often the first to feel the impact when fuel prices rise.
Trucking associations and industry sources cited several factors contributing to the elevated prices, including strained crude-oil supply chains, refinery closures, strong European demand for diesel and higher costs associated with cleaner-burning fuel requirements in California.
Questions Remain Over the Impact
Fuel-tax holidays can reduce the tax portion of the pump price, but the total savings depend on wholesale fuel costs, refinery capacity, transportation expenses and how much of the reduction is passed through by suppliers and retailers.
Industry officials say even small per-gallon changes can have a significant effect on trucking operations because commercial vehicles consume large volumes of fuel. For carriers operating on narrow margins, prolonged fuel-price increases can affect freight rates, delivery costs and business viability.
Additional proposals, including temporary exemptions involving off-road diesel, have also been discussed in some states. Off-road diesel is chemically similar to on-road fuel but is exempt from federal and state excise taxes and generally may not be used in vehicles operating on public highways.
