California gas tax rises July 1, adding cents at the pump

Californians will pay more at the pump starting July 1, as the state's gasoline excise tax rises again just as millions prepare for Fourth of July travel.

The increase is modest per gallon, but layered onto already high fuel prices and other fees, it's expected to push costs up statewide during one of the busiest driving weeks of the year.

Even as gas consumption declines with more electric vehicles on the road, the state continues to rely heavily on fuel taxes to fund transportation.

That creates a tension:

• Higher taxes per gallon
• On fewer gallons sold

For drivers, that likely means continued upward pressure on fuel costs - especially during peak travel seasons like summer.

California gas prices changes on July 1

Most drivers won't see just a 2-cent bump - real-world increases could be closer to several cents more per gallon depending on market factors and regulations.

Gas tax (excise tax)

• Rises from 61.2 cents to 63.4 cents per gallon
• That's an increase of 2.2 cents per gallon

Diesel tax

• Rises from 46.6 cents to 48.2 cents per gallon

Additional cost pressures

• Low Carbon Fuel Standard changes could add 5 to 9 cents per gallon
• Total state taxes, fees and programs already add about $1.20 per gallon

Why California gas taxes go up every year

The annual increase is built into state law.

• A 2017 transportation funding law (SB 1) requires yearly adjustments tied to inflation
• The rate is recalculated each year based on the California Consumer Price Index
• Revenue funds road maintenance, bridge repairs and congestion relief projects

Voters upheld the system in 2018 by rejecting a repeal attempt, allowing automatic increases to continue.

What Californians are paying now

California already leads the nation in gas prices.

• Average gas price: about $5.48 per gallon as of late June
• About 52% higher than the national average

Costs are driven by:

• Taxes and environmental programs
• Limited refinery capacity
• Supply constraints and global oil markets

July Fourth travel will test prices in California

Despite higher prices, millions of Californians are still hitting the road.

• 8.94 million Californians expected to travel 50+ miles
• More than 7 million will drive during the holiday window

That surge in demand can also push pump prices higher, especially in high-traffic regions.

What California drivers will actually pay

The per-fill increase is small, but the cumulative cost over a summer of driving is noticeable, especially for long commuters. Sample commute impact (rough estimates):

Southern California commuter (25 miles each way)

• ~10 gallons/week fuel use
• Tax increase adds roughly $0.22/week
• With other cost increases, could be closer to $0.50–$1/week

Bay Area commuter (longer distances, higher prices)

• ~12 gallons/week
• Adds $0.26+ per week from excise tax alone
• More when local prices spike

Central Valley driver

• Added cost still small per fill-up, but adds up over time
• Lower base prices, but longer drives

(This story was updated to add photos.)

This article originally appeared on Palm Springs Desert Sun: California gas tax rises July 1, adding cents at the pump

Reporting by James Ward and Roseann Cattani, USA TODAY NETWORK / Palm Springs Desert Sun

USA TODAY Network via Reuters Connect

Copyright Reuters or USA Today Network via Reuters Connect

This story was originally published July 6, 2026 at 4:07 PM.