California Gas Tax Hike Means Better Roads

California – Effective November 1, 2017, Senate Bill 1 increased the state excise tax on motor vehicle fuel and diesel fuel along with the sales and use tax rate on diesel fuel in California. The tax increase is expected to raise more than $5.2 million per year to repair roads, improve public transit, and reduce traffic congestion. According to Governor Jerry Brown, “California has not increased the base excise tax on gasoline in 23 years. The result is a backlog of some $130 billion in road, highway and bridge repairs throughout California and not enough money to fix the structures.”

The excise tax on motor vehicle fuel increased from 29.7 cents per gallon to 41.7 cents per gallon, and diesel fuel increased from 16 cents per gallon to 36 cents per gallon. The sales and use tax rate on diesel fuel increased from 9% to 13%. Retailers, wholesalers, and suppliers who held in inventory tax paid motor vehicle fuel or diesel fuel on November 1, 2017, at 12:01 a.m., will need to file a storage tax return and pay a storage tax in addition to the fuel tax rate increase. The return and payment are due no later than January 1, 2018.

Senate Bill 1 also introduced a new transportation improvement fee. Effective January 1, 2018, drivers will pay an annual vehicle fee that will range from $25 to $175 based on the value of the vehicle. Electric car drivers will pay an annual fee of $100 starting July 1, 2020.

About Davis & Davis LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis & Davis LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis & Davis, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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