California, October 13, 2025
News Summary
Starting July 1, California will implement a 1.6 cent increase in its gas tax, pushing the current rate to 61.2 cents per gallon. Governor Newsom has also introduced stricter air quality regulations that may add 5 to 8 cents per gallon to gas prices. This change marks a crucial financial shift as the state prepares to phase out gas taxes and transition to a mileage-based system, amid a projected 64% decline in gas tax revenue by 2035 due to the rise of zero-emission vehicles.
California’s gas prices are set to rise as an annual tax increase and stricter regulations come into effect on July 1. Starting next month, the state’s gas tax will increase by 1.6 cents per gallon, which will be added to the existing gas tax bill that now tops $600 per year for the average household.
In addition to the gas tax hike, Governor Gavin Newsom’s office has indicated that new air quality regulations will also apply, potentially increasing gas prices by an estimated 5 to 8 cents per gallon. Currently, the average price for a gallon of regular unleaded gas in the Los Angeles – Long Beach area stands at $4.61, which is 18 cents lower than this time last year.
California already holds the title for the highest gas tax rate in the nation, currently at approximately 59 cents per gallon. Following the tax adjustment on July 1, this rate will rise to 61.2 cents per gallon. Additionally, the tax on diesel fuel will increase from 45.4 to 46.6 cents per gallon.
According to data from Caltrans, the average gas-powered vehicle in California contributes around $300 annually in state gas taxes. However, legislative analysts are forecasting a significant decline in gas tax revenue, with expectations of a $5 billion drop, or 64%, by 2035 as zero-emission vehicles continue to gain market share. In response, the state is planning to phase out gas taxes in favor of a California Road Charge system which will assess fees based on mileage driven rather than the number of gallons used.
A pilot program testing the California Road Charge was initiated in August 2024 and concluded in January, with results expected to be released later this year. Currently, motor fuel taxes are a substantial revenue source for transportation, contributing about 36% in fiscal year 2024, down from 41% in fiscal year 2016.
California and Oregon have set an ambitious target for all new passenger cars sold to be zero-emission vehicles by 2035. The California Air Resources Board (CARB) has also approved amendments to its Low Carbon Fuel Standard program aimed at incentivizing lower-carbon fuels, which may lead to increased costs at the pump. Initial estimates suggested that these changes could raise gasoline prices by another 47 cents per gallon, although this estimate has been revised.
The upcoming price increase coincides with ongoing fluctuations in global oil prices, influenced by geopolitical tensions and variations in domestic supply. However, despite these developments, gas prices in California remain approximately 20 cents per gallon lower than the previous year, offering some relief as the summer holiday season approaches.
Experts have projected that the Low Carbon Fuel Standard could lead to further gas price increases, ranging from 65 cents in the near term to as much as $1.50 by 2035. Nevertheless, CARB has contested those more extreme forecasts indicating various factors at play in price determination.
Frequently Asked Questions
What will happen to gas taxes in California starting July 1?
Starting July 1, California’s gas tax will increase by 1.6 cents per gallon.
What is the current average price for gasoline in Southern California?
The average price for a gallon of regular unleaded in the Los Angeles – Long Beach area is currently $4.61.
What is California’s gas tax rate compared to other states?
California currently has the highest gas tax rate in the country at about 59 cents per gallon.
How much is the tax on diesel fuel projected to increase?
The tax on diesel fuel will rise from 45.4 to 46.6 cents per gallon.
What significant changes are expected in gas tax revenue by 2035?
Legislative analysts predict gas tax revenue will fall by $5 billion, or 64%, by 2035 as zero-emission vehicles gain market share.
What is the California Road Charge program?
The state aims to phase out gas taxes in favor of a California Road Charge that would charge drivers based on mileage instead of gallons used.
Key Features of the California Gas Tax Increase
| Aspect | Details |
|---|---|
| New Gas Tax Rate | Increased by 1.6 cents per gallon, from 59 to 61.2 cents per gallon |
| Diesel Tax | Increased from 45.4 to 46.6 cents per gallon |
| Average Household Tax Contribution | Exceeds $600 per year |
| Current Gas Price | $4.61 per gallon |
| Projected Revenue Decline by 2035 | Expected to decrease by $5 billion, or 64% |
| Transition to a New Charging System | Phasing out gas taxes for a mileage-based California Road Charge |
Deeper Dive: News & Info About This Topic
- ABC7: California Looks to Eliminate Gas Tax
- Wikipedia: California Gas Tax
- Los Angeles Times: Why Gas Prices May Rise
- Google Search: California Gas Prices July 2025
- Politico: Newsom and California Fuel Standards
- Encyclopedia Britannica: Gas Tax
- NBC Los Angeles: Gas Prices Rise on July 1
- Google Scholar: California Gas Tax 2025
- KTLA: Filling Up Will Cost More Starting Tuesday
- Google News: California Gas Tax Increase
Author: STAFF HERE HOLLYWOOD
The Hollywood Staff Writer represents the experienced team at HEREHollywood.com, your go-to source for actionable local news and information in Hollywood, Los Angeles County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Hollywood Bowl summer concerts, the Hollywood Christmas Parade, film premieres at TCL Chinese Theatre, and festivals at the Magic Castle. Our coverage extends to key organizations like the Hollywood Chamber of Commerce and Visit Hollywood, plus leading businesses in entertainment, dining, and tourism that define the local economy. As part of the broader HERE network, including HERELosAngeles.com, HEREBeverlyHills.com, HEREAnaheim.com, and HEREHuntingtonBeach.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
