If We Implemented Biden’s Proposed Federal Gas Tax Holiday, How Much Money Would We Save? – If you have been feeling stressed out because of the high cost of petrol, you may have found it relieving to learn that the administration of Vice President Joe Biden is considering instituting a gas tax holiday in order to reduce prices at the pump.
But what exactly is the gas tax, and would temporarily eliminating it really have that much of an effect on the prices that consumers pay for fuel? The article that follows will contain our responses to those questions.
How much does the gas tax cost?
Consumers are responsible for paying both federal and state taxes on petrol purchases. The money collected from these taxes goes toward funding various infrastructure projects and other initiatives run by the government.
The current rate of the federal gas tax for gasoline is 18.4 cents per gallon, and the rate for diesel is 24.4 cents per gallon. Although the amount of the gas tax is left up to the individual states, on average, each gallon of fuel costs 31.02 cents to tax.
What exactly is a Holiday from Gas Taxes?
Because of the rising price of gasoline, a number of lawmakers and customers have requested that President Biden temporarily halt the collection of revenue from the federal gas tax. Georgia, Connecticut, New York, Maryland, and Florida are the five states that have already stopped collecting their state gas tax revenue. However, motorists in these states are still required to pay the national gasoline tax.
Regrettably, a holiday from paying the federal gas tax would not have much of an impact. As a result of the low level at which the federal government sets the tax on gasoline, customers may not notice much of a change if the tax is suspended briefly. For instance, if gas costs $5 a gallon and your vehicle has a tank that can hold 15 gallons, you will only save a total of $2.76 each time you fill up your tank. That is not a significant difference at all.
According to the opinions of certain other authorities, fuel providers will not immediately transmit the benefits of lower gas taxes to customers. According to research conducted by the University of Pennsylvania, the gas tax holiday was passed on to consumers in the amount of approximately 65% in the state of Georgia, while in the state of Maryland, the gas tax holiday was passed on to consumers in the amount of approximately 72%.
According to the estimations of certain industry professionals, the price of gasoline is determined by taxes for only around 15% of the total cost, while the remaining 60% is determined by the cost of crude oil. The falling price of oil is the primary factor in lowering the cost per gallon; removing the gas tax is not the answer.
Other Methods for Cutting Your Gas Costs
You can still discover alternative methods to spend less for petrol, even if you don’t live in a state that has a holiday for the gas tax or if you do live in a state that does.
Make use of a card that offers monetary incentives.
There are a number of credit cards that provide cash-back benefits whenever you make a purchase. Examine all of your existing credit cards, and determine which one offers the largest percentage cash back reward.
You may start reaping the benefits of cash-back credit cards by applying for a new card if you don’t already have any. Pick a card that offers the best possible cash-back % across the board for purchases made at petrol stations and other types of shops. In an ideal scenario, you should also look for a card that offers a sizable sign-up bonus, as this will add some more funds to your wallet.
If you won’t benefit in any other way from having the card, you should make every effort to avoid receiving a card that charges an annual fee.
Organize the things in your car.
When there is more cargo in the vehicle, the amount of fuel that is used increases. Spend a day sorting through everything in the car and getting rid of anything that isn’t required for driving. Pay attention to the things that weigh the most, such as the bike racks. When you find that you need those products again, you may always add them back on.
Pay with real money.
If you pay with cash rather than a card at certain gas stations, you might be eligible for a special discount. It is possible that you will need to inquire about these savings in person; but, you could end up paying less than you would have if you had used a credit card that offered cash back.
If you decide to make your gas purchase using cash, check to see that you are not subject to any additional ATM withdrawal costs, as this could eat into any potential savings.
Register yourself to receive savings.
When you sign up for the rewards program of certain gas station chains, you might receive discounts on your purchases. Joining is often free, however some organizations do charge annual or monthly dues to be eligible for the deepest discounts.
If there is a cost, you need to do the arithmetic to see whether you will end up ahead, staying even, or falling behind financially. Think about how convenient it is to go to that particular chain, or whether you’ll have to travel out of your way just to get something to eat or drink.
If you already shop at a warehouse club like Costco on a regular basis, you might want to wait until you’re there to fill up your tank because the costs there are typically lower than those at other gas stations.
When you reach a certain spending threshold at a particular grocery store chain, you’ll be rewarded with a discount on your petrol purchase. Be careful that you do not end up spending more money on food as a result of saving money on gas.
Find out how much petrol costs.
Prices for gasoline can be extremely different from one station to the next. Utilize a tool like GasBuddy.com in order to locate the station that sells gasoline at the lowest price in your area before you fill up your tank. It is in your best financial interest to avoid going too far out of your way to buy gas because doing so will cause you to spend more money.
Deduct expenses incurred while traveling for business.
If you are your own boss, you might be eligible to deduct the mileage you’ve driven from your taxable income. You can take a deduction for either the number of miles driven or the amount of money that was spent on gas. Be sure to keep careful records of how much money you spend and how much time you spend driving.
If you have a regular job, it’s not likely that you’ll be able to deduct your mileage from your taxes. If this is the case, you need to speak with your employer about getting a reimbursement for these costs. If they provide their approval, you should start keeping track of your miles and submitting expenditure reports on a regular basis. If there is a business vehicle available, you should inquire about using that instead of your own vehicle if it is available.
It’s best to schedule errands outside of rush hour.
If you can reduce the amount of time you spend sitting in your car waiting for traffic, you will save more gas. Plan your errands to take place at a time of day when there are fewer automobiles on the road rather than immediately after you get off work. You should also make an effort to cluster your errands together, particularly if they are all located in the same section of the city. You can improve your productivity and select the path that will take you the shortest distance using Google Maps.
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