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Gas tax holiday is dead,
higher gas tax is possible

July 19, 2008

Sales tax holidays (upcoming dates are blogged about here) have managed to hold on despite tough times for state treasuries, but the idea of a summer gas tax holiday never had a chance.

The reason? Politicians weighed the electoral cost of making some highway-bound vacationers happy vs. irking hundreds of thousands who would lose their jobs if the fuel tax money flow was halted.

The graphic below from the Associated Press shows the projected distribution of highway-related jobs that would have disappeared had the fuel tax been suspended for three months.

Gas_tax_holiday_and_jobs_ap_gaphic

An analysis by the House Transportation and Infrastructure Committee indicated that a summer gas tax holiday would have cost a total of $9 billion, with losses on road-related projects ranging from $30 million
and 1,000 jobs in Vermont to $664 million and 23,000 jobs in California.

As the AP story notes, that’s a pre-election specter that no Capitol Hill denizen, regardless of party, wants.

In fact, says the AP, lawmakers are actually talking about raising current fuel taxes — now 18.4 cents per gallon on gasoline and 24.3 cents per gallon for diesel — by a dime.

The added money would bulk up the Highway Trust Fund, which is heading down a deficit route.

I guess it’s time to start looking for a more fuel-efficient car.

Compensating for higher pump prices: One Austin-area company is providing its workers with some added gas money.

Leander-based Cypress Technologies is calculating the cost of gas a year ago and then reimbursing its
employees the difference
.

Company management says the gas money bonuses are an investment in employees, ensuring the workers won’t go elsewhere. The rank and file are obviously delighted to get the money.

I don’t know how the gas money payments are structured, but I’m wondering if they are considered taxable or tax-free fringe benefits to the workers. The distinction could make a difference, although according to this H&R Block item on benefits, even if the value of a fringe benefit is included in your taxable income, you still come out ahead.

The IRS has a guide to fringe benefits and their various tax treatments, and it notes that some qualified transportation  expenses can be excluded from worker wages. But this typically covers transportation to conduct work duties away from the main office.

Transportation expenses, notes the IRS guide, must be distinguished from commuting costs, which are not excludible from employee income.

Commuter savings account coverage: However, a company can set up a tax-advantaged commuter savings account (CSA) for workers.

This is similar to flexible savings plans for medical costs and child care, in which a worker puts pre-tax money into the accounts to pay for eligible transit and/or parking expenses incurred in getting to the office.

Hov_sign
Payroll deduction amounts, chosen by the employee, are made up to the annual limits set by the IRS; for 2008, the monthly maximums are $115 for mass transit or van pooling fees, $220 for parking charges.

Typically, vouchers are provided for mass transit options. For the cost of parking at the bus or train station or at a garage near the office, the employee is reimbursed from the account.

Sorry, but you can’t get money to cover your car’s fill-ups, but the parking coverage should give you more gas money.

This calculator can help you see how much a CSA could save you.

Share your gas tips: How are you dealing with the high price of fuel?

Does your company offer a commuter savings plan? Are you enrolled or plan to enroll during the upcoming benefits open season?

Are you driving less? Car or van pooling?

Taking alternative transportation? Telecommuting? Buying a hybrid?

Share your gas- and money-saving tips with us in the comments section.

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The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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