Motor Vehicle Fuel Tax Law: adjustment suspension.

Plain English Breakdown

The official source does not specify the exact duration of the tax adjustment suspension.

Suspension of Motor Vehicle Fuel Tax Adjustments

This law allows the Governor to pause yearly increases in motor vehicle fuel taxes if they would be too hard for low-income and middle-class families, while ensuring transportation funding stays the same.

What This Bill Does

• Allows the Governor to suspend an increase in the motor vehicle fuel tax rate on or after July 1, 2025, if it is decided that raising the tax would impose an undue burden on low-income and middle-class families.
• Requires the Governor to notify the Legislature of their intent to suspend the tax adjustment by January 10 of each year before the adjustment date.
• Needs the Department of Finance to submit a proposal to the Legislature by January 10 that keeps transportation funding at the same level as if there was no pause in the tax increase.

Who It Names or Affects

• Drivers who pay motor vehicle fuel taxes
• The Governor, who can decide to suspend the tax increase
• Low-income and middle-class families

Terms To Know

Motor Vehicle Fuel Tax Law

A law that puts a tax on each gallon of motor vehicle fuel sold in California.

California Consumer Price Index (CPI)

A measure used to track changes in the cost of living and inflation in California.

Limits and Unknowns

• The bill does not specify how long the tax adjustment suspension can last.
• It is unclear what happens if the Governor decides not to notify the Legislature by January 10 as required.

Official Summary Text

AB 1268, as introduced, Macedo.
Motor Vehicle Fuel Tax Law: adjustment suspension.
(1) The Motor Vehicle Fuel Tax Law, administered by the California Department of Tax and Fee Administration, imposes a tax upon each gallon of motor vehicle fuel removed from a refinery or terminal rack in this state, entered into this state, or sold in this state, at a specified rate per gallon. Existing law requires the department to adjust the tax on July 1 each year by a percentage amount equal to the increase in the California Consumer Price Index, as calculated by the Department of Finance.
Article XIX of the California Constitution restricts the expenditure of revenues from the Motor Vehicle Fuel Tax Law, Diesel Fuel Tax Law, and other taxes imposed by the state on fuels used in motor vehicles upon public streets and highways to street and highway and certain mass transit purposes.
This bill would authorize the Governor to suspend an adjustment to the motor vehicle fuel tax, as described above, scheduled on or after July 1, 2025, upon making a determination that increasing the rate would impose an undue burden on low-income and middle-class families. The bill would require the Governor to notify the Legislature of an intent to suspend the rate adjustment on or before January 10 of that year, and would require the Department of Finance to submit to the Legislature a proposal by January 10 that would maintain the same level of funding for transportation purposes as would have been generated had the scheduled adjustment not been suspended.
(2) The California Constitution provides for the establishment of the State Board of Equalization, which, before July 1, 2017, had primary responsibility for most of the state’s duties, powers, and responsibilities regarding the administration of
taxes and fees. Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization, including administration of the Motor Vehicle Fuel Tax Law and the Diesel Fuel Tax Law, as specified.
This bill would also change references in these provisions of law from the “State Board of Equalization” to the “California Department of Tax and Fee Administration” or “department,” as applicable, to reflect the transfer of the board’s duties, powers, and responsibilities to the department.
(3) This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF