The increasing gas prices had lawmakers taking a series of actions to ease the struggles at the pump. California was one of the first states to waive the sales tax at the gas pump, helping Americans save at least a few bucks.
Now that Californians don’t pay gas tax at the pump, a rebate is in the talks to pay back up to $400 to the state’s taxpayers. However, this gas tax rebate won’t work as simple as refunding taxpayers what they would’ve paid otherwise – more details are below.
Rebate over waiving the gas tax
If the proposed law comes into effect, Californians will continue paying sales tax at the gas pump but will get a refund when they file their state income tax returns. This is an effective measure as there is no assurance that oil companies will comply with the law and pass on the savings to customers.
With one of the highest gas taxes at the pump at 51 cents per gallon, this change is aimed to effectively help consumers. Additionally, this tax rebate won’t just help Californians get a return back of their gas tax money. They’ll also be able to offset the fluctuating prices for food and other essentials. After all, when the gas prices go up, it isn’t just the commuters that get affected. Companies are also impacted and these prices force them to increase prices to keep an even cut.
When is the law coming into effect?
Since this is just a proposal, there isn’t a certainty that the law will pass. While we have the details, the law may not pass at the end. If it does, there’ll be a few changes to the California tax code so that taxpayers can claim their refundable credit.
Although how it would play out once the law passes, one thing is for sure – the rebate would be in the form of a tax credit, much like the recovery rebate credit for the Economic Impact Payments that were sent to taxpayers.
The taxpayers that didn’t or couldn’t get their payments but were eligible qualified for this fully refundable credit. It wouldn’t be wrong if we anticipate the same kind of function if and once the gas tax rebate law passes.