California Assembly Republicans introduced legislation to freeze the state’s motor vehicle fuel tax for a full year, targeting the $0.61 per gallon excise rate that hits drivers at the pump. Assemblyman Jeff Gonzalez and Republican coauthors introduced AB 1745, which would suspend the state excise tax on gasoline for one year. The bill arrives as Sacramento remains split over whether tax relief or supply-side regulation is the better answer to some of the highest gasoline costs in the country.
What AB 1745 Would Actually Do
The bill, formally titled the Motor Vehicle Fuel Tax Law: suspension of tax, would halt collection of the state excise tax on gasoline for one year. Unlike vague campaign pledges to “cut gas taxes,” the text of AB 1745 proposes enforcement mechanisms intended to prevent fuel distributors and retailers from simply pocketing the savings. Fuel sellers would be required to pass the suspended tax amount through to consumers at the point of sale, and gas station receipts would need to display the tax amount that would have been collected, giving drivers a visible accounting of the discount they are receiving.
That receipt transparency provision is notable because it addresses a persistent criticism of gas tax holidays at both the state and federal level: that oil companies absorb the break rather than lowering prices. By mandating disclosure on every transaction, the bill’s authors are attempting to create a paper trail that regulators and consumers can audit. The measure is still in its earliest procedural stages, with its official status record showing only its introduction and print date so far, meaning committee referrals and hearings have yet to be scheduled.
The $0.61 Rate and How California Taxes Fuel
The excise tax that AB 1745 targets is set at $0.61 per gallon, a rate listed by the state tax agency as effective July 1, 2025. That figure reflects years of incremental increases built into state law, including adjustments tied to inflation. Diesel fuel carries its own separate rate on the same schedule. For a driver filling a 15-gallon tank, the excise tax alone adds roughly $9.15 per visit, a cost that compounds quickly for commuters, rideshare drivers, and commercial fleets.
The excise tax is only one layer of what Californians pay on fuel. The state also collects sales tax on gasoline, and the California Department of Tax and Fee Administration publishes a separate table of prepayment rates for gasoline, diesel, and jet fuel, listed in cents per gallon by effective period. That distinction matters because AB 1745 targets only the excise tax, not the sales tax prepayment or other fees. Drivers who expect the full tax burden to vanish would still see sales tax charges on their receipts even if the suspension took effect.
GOP Pressure Campaign Predates the Bill
AB 1745 did not emerge in isolation. Months before Gonzalez filed the bill, Rep. Doug LaMalfa and the broader California Republican congressional delegation sent a public letter urging Governor Gavin Newsom to halt new gas price increases. In that delegation letter, GOP members argued that scheduled tax hikes and regulatory mandates were pushing California pump prices far above the national average and called on the governor to pause new increases scheduled for mid-2025.
The delegation’s letter framed the issue as a cost-of-living emergency rather than a narrow tax policy debate, linking fuel costs to grocery prices, small business overhead, and household budgets across rural and suburban districts. That federal pressure came from Republicans serving in the U.S. House of Representatives, whose membership and contact information are listed on the official House website. By the time Gonzalez introduced AB 1745, the rhetorical groundwork had already been laid through that Washington-based campaign. The state-level bill now gives Republican legislators a concrete vehicle to force recorded votes on gas tax relief, putting Democratic colleagues in the position of either backing a suspension or defending the current rate structure heading into summer driving season.
Newsom’s Alternative: Regulating Supply, Not Cutting Taxes
The governor’s office has pursued a different theory of the case. In October 2024, Governor Newsom signed a refinery bill, known as ABX2-1, aimed at preventing gas price spikes by addressing refinery supply and operational practices. The law focused on requiring refineries to maintain minimum fuel inventory levels and gave regulators new authority to intervene when supply disruptions threaten to push prices sharply higher. The signing announcement framed the measure as a way to save Californians money without sacrificing the road maintenance and transit funding that excise tax revenue supports.
That philosophical divide sits at the center of the AB 1745 debate. Republicans argue that the most direct path to lower prices is to remove the tax itself, while the administration’s position, as reflected in ABX2-1, is that refinery behavior and supply management are the real drivers of price volatility. Neither approach has been tested long enough to produce definitive results. ABX2-1 was signed on Oct. 14, 2024, and no publicly available fiscal impact study from the Legislative Analyst’s Office on AB 1745 is cited in the bill materials linked above, leaving both sides to argue from projections rather than outcomes.
Where Refinery Margins Fit In
One data point that complicates the clean “just cut the tax” narrative comes from the California Energy Commission’s price breakdown. As of February 18, 2026, refinery costs and profits stood at 18.4 cents per gallon. That figure covers refining operations, terminal handling, crude oil processing, and oxygenate additives. When refinery margins are relatively modest compared to the $0.61 excise tax, the Republican argument gains traction: the state’s own levy is more than three times the refinery profit margin on each gallon.
But that snapshot can shift quickly. Refinery-related costs and profits can change during supply disruptions, maintenance shutdowns, and seasonal transitions. The administration’s bet with ABX2-1 is that controlling those spikes delivers more consistent savings than a one-year tax holiday that expires and leaves drivers facing the same rate again. For AB 1745’s backers, however, the math is simpler: suspending $0.61 per gallon delivers a known, immediate reduction, while supply regulations operate on a longer and less visible timeline.
Political Odds and Structural Barriers
Republicans hold a distinct minority in both chambers of the California Legislature, which means AB 1745 cannot pass on GOP votes alone. The bill would need significant Democratic crossover support to clear committee and reach the floor, a tall order given that the majority party has historically defended the gas tax as essential infrastructure funding. A 2017 effort to repeal the gas tax increase through a ballot measure failed, and prior legislative attempts to revise fuel taxes in the 2019–2020 session did not advance to passage. Those earlier efforts illustrate how difficult it has been to build a coalition for rolling back fuel-related revenue streams once they are embedded in long-term transportation plans.
The bill’s real leverage may be political rather than legislative. By forcing the issue into committee hearings and public debate ahead of summer, when gas prices typically climb, Republicans can frame any Democratic opposition as a vote to keep prices high. That dynamic is especially potent in swing districts where moderate Democrats face competitive reelection races. Even if AB 1745 never reaches the governor’s desk, the measure’s introduction in the Assembly gives Republicans a focal point for campaign messaging, mail pieces, and floor speeches that contrast their call for immediate tax relief with the administration’s emphasis on regulatory solutions.
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*This article was researched with the help of AI, with human editors creating the final content.
Julian Harrow specializes in taxation, IRS rules, and compliance strategy. His work helps readers navigate complex tax codes, deadlines, and reporting requirements while identifying opportunities for efficiency and risk reduction. At The Daily Overview, Julian breaks down tax-related topics with precision and clarity, making a traditionally dense subject easier to understand.
