California Gas Prices Set to Rise Due to New Tax and Regulations

California, October 13, 2025

News Summary

Starting July 1, California will implement a gas tax increase of 1.6 cents per gallon, pushing the total gas tax to 61.2 cents. Concurrently, stricter air quality regulations may add an additional 5 to 8 cents per gallon to gas prices. This change will affect the average household gas tax costs, exceeding $600 annually. The state is also transitioning towards zero-emission vehicles and may replace traditional gas taxes with a mileage-based road charge amid declining gas tax revenues. Despite these increases, current prices remain lower than last year.

California will see an increase in gas prices starting July 1, with a new tax rate and stricter air quality regulations coming into effect. The state’s gas tax will increase by 1.6 cents per gallon, making the total gas tax in California exceed $600 per year for the average household.

As part of the new regulations, the California Air Resources Board (CARB) will also implement stricter air quality standards that are projected to add an estimated 5 to 8 cents per gallon to gas prices. This follows the current average price for regular unleaded gasoline in the Los Angeles – Long Beach area, which stands at $4.61—down 18 cents compared to the prior year.

The new tax will raise California’s gas tax from approximately 59 cents per gallon to 61.2 cents per gallon, maintaining the status of the state as having the highest gas tax rate in the country. Diesel fuel taxes will also see an increment, increasing from 45.4 cents to 46.6 cents per gallon. Motor fuel taxes have historically represented a significant portion of the state’s transportation revenue; however, this financial contribution has decreased from 41% in fiscal year 2016 to approximately 36% in fiscal year 2024.

Recent reports from Governor Gavin Newsom’s office have addressed misinformation circulating regarding potential gas prices reaching $8 per gallon by 2026. Legislative analysts predict that gas tax revenues may decline by $5 billion—or 64%—by the year 2035 as zero-emission vehicles continue to gain market share. California aims to replace traditional gas taxes with a California Road Charge that would charge drivers based on mileage rather than gallons used.

A pilot program to test this road charge was initiated in August 2024 and concluded in January, with results expected to be released later this year. The transition to zero-emission vehicles is further supported by California and Oregon’s shared goal for all new passenger cars sold to be zero-emission vehicles by 2035.

In 2024, amendments to the Low Carbon Fuel Standard program were approved to encourage lower-carbon fuels, although earlier estimates suggested these changes could raise gasoline prices by an additional 47 cents per gallon. Nevertheless, CARB later revised this calculation.

The current gas pricing landscape is also impacted by fluctuating global oil prices, which are influenced by various geopolitical tensions and domestic supply changes. Despite the impending increase in taxes and regulations, California gas prices remain 20 cents per gallon lower than the previous year, potentially providing some relief as the summer holiday season approaches.

Experts have predicted that future gas price increases could spike significantly due to regulations like the Low Carbon Fuel Standard, estimating increases of up to 65 cents in the near term and as much as $1.50 by 2035; however, CARB has contested extreme projections.

Key Facts Summary

• Gas tax in California will increase by 1.6 cents per gallon from July 1.
• Total gas taxes for the average household exceed $600 annually.
• Stricter air quality regulations could add 5 to 8 cents per gallon.
• The average price of regular unleaded gas is $4.61 in Los Angeles.
• California’s gas tax will rise to 61.2 cents per gallon.
• Diesel fuel tax to increase from 45.4 to 46.6 cents per gallon.
• Gas-powered vehicles contribute about $300 a year in state gas taxes.
• Gas tax revenue projected to fall by $5 billion by 2035.
• California’s aim is for all new passenger cars sold to be zero-emission vehicles by 2035.
• Pilot program for the California Road Charge tested in 2024.

FAQ Section

Chart: Key Features of the Upcoming Gas Tax Changes

Deeper Dive: News & Info About This Topic

• Los Angeles Times
• ABC7 News
• NBC Los Angeles
• Politico
• KTLA News
• Wikipedia: Gasoline in the United States
• Google Search: California gas tax
• Google Scholar: California fuel standards
• Encyclopedia Britannica: Gasoline
• Google News: California gas prices

Author: STAFF HERE MISSION VIEJO WRITER

MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.