The high price of gasoline and diesel in Connecticut fuels a campaign debate between Democrats and Republican over suspending state taxes on the two motor fuels to give consumers and businesses a break.
Jim Shay/Hearst Connecticut Media
Gov. Ned Lamont, pictured here, floats the idea of a gasoline tax holiday during a news conference in March at the Meriden depot of Tuxis-Ohr Fuel with State Comptroller Sean Scanlon.
Paul Hughes/Hearst Connecticut Media
Rising pump prices tied to the war in Iran have Republicans in Connecticut calling for a gas tax holiday in the crucial final stretch of the 2026 state elections.
The average price of gasoline in Connecticut was $2.91 a gallon on Feb. 28 when the United States and Israel launched coordinated, widespread military attacks against Iran and $4.46 a gallon on Oct. 2, according to AAA Northeast. The average price of diesel fuel rose from $3.99 a gallon to $6.48 a gallon during that same stetch.
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The high cost of living in Connecticut is a perennial campaign issue, and affordability is the defining issue of the 2026 election, with polling showing state voters overwhelmingly focused on the rising cost of housing, energy, and everyday living expenses.
A Sacred Heart University/WFSB/CT Insider poll released in early August found 29.4% of registered voters identified the cost of living and inflation as the single most important issue in deciding their vote for governor, 12.9% selected taxes, 10.8% named electricity and energy costs, and another 10% said jobs and the economy.
Given how fuel prices were already a highly visible household cost, the sharp increases since February are elevating the profile of the cost of a gallon of gas as a political issue in the 2026 elections for governor and the General Assembly.
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Gov. Ned Lamont first floated the possibility of suspending the gasoline tax 11 days after the U.S. and Israel attacked Iran. At that time, gas prices in Connecticut were approaching $4 a gallon. Without a full plan in place, the concept generated little interest then from Democrats or Republicans in the General Assembly and he soon abandoned it. Now, Republicans are reviving the proposal weeks ahead of the Nov. 3 general election.
On Sept. 30, House Minority Leader Vincent J. Candelora Jr., R-North Branford, and Senate Minority Leader Stephen G. Harding, R-Brookfield, called on Lamont and the Democratic majority to join Republicans to suspend state taxes on gasoline and diesel fuel through Dec. 31. The GOP leaders proposed convening an immediate special legislative.
“They talked about it in March and then did nothing,” Candelora said in a statement.
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Republican gubernatorial Ryan Fazio quickly seconded that call from Harding and Candelora. Lamont and Democratic leaders appear unlikely to take up the GOP suggestion anytime soon.
“If Republicans have a problem with the price of gas and diesel, they should march their way down to 1600 Pennsylvania Ave. and talk to the head of their party, who sits in the Oval Office, about why he started this pointless, illegal war that has raised gas prices by over 40%,” Senate Majority Leader Bob Duff, D-Norwalk, said in a statement.
What is the gas tax?
Connecticut imposes a 25-cent-per-gallon excise tax on gasoline, but that is not the only motor fuels tax that factors into the cost of gallon of gas.
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The state also imposes an 8.1% wholesale tax when fuel is sold to local gasoline stations. While the petroleum products gross earning tax is a wholesale tax, the gas stations and distributors generally pass some or all of the cost along in fuel prices. This percentage-based tax rises and falls with the price of gasoline. But there is a $3-per-gallon cap. If the wholesale price exceeds that capped price, distributors are required to exempt any excess amount over $3 when calculating the tax.
There is also a 49.9-cent-a-gallon tax on diesel fuel. This tax is recalculated every July 1. There is a flat base rate of 29 cents a gallon, plus a variable rate that the state Department of Revenue Services recalculates by multiplying the average wholesale price per gallon by the rate of the gross earnings tax in effect for the upcoming 12-month period starting every July 1.
In addition to the state excise taxes, there are federal excise taxes of 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel.
How do fuel prices add up?
Connecticut has among the highest gasoline prices in the nation because the state has one of the highest taxes on gasoline in the country, according to the Connecticut Energy Marketers Association, a trade organization representing independent home heating oil, motor fuel, and propane dealers across Connecticut.
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The combined state and federal taxes add 63.52 cents to the cost of a gallon of gas sold in Connecticut and 68.3 cents to the cost of a gallon of diesel, according to CEMA statistics.
The average AAA price of $4.46 a gallon on Oct. 2 ranked 16th highest in the U.S. that Friday, according to national AAA averages, and the AAA average of $6.48 for a gallon of diesel also held 16th rank nationally.
What are GOP leaders proposing?
The Republican leaders and Fazio, a state senator from Greenwich, are proposing to suspend collection of gas and diesel taxes through Dec. 31.
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The two GOP leaders estimated that suspending the gas tax through the end of 2026 would cost $92 million, and suspending the diesel tax would cost another $36 million. Harding and Candelora proposed to use Special Transportation Fund reserves to cover the $128 million revenue loss. Fazio expressed support for the idea.
“Connecticut could temporarily suspend the gas tax through the end of the year, fully funded by the Special Transportation Fund’s existing balance, and still have money left over,” Fazio said in a Sept. 30 statement. “I call on the Legislature and the Governor to do so.”
The state Office of Policy and Management is projecting the Special Transportation Fund will end the current fiscal year next June 30 with a $643.4 million fund balance. The comptroller’s office concurred with this latest OPM estimate.
Connecticut drivers saved nearly $275 million when the legislature and Lamont last suspend the full 25-cent-a-gallon gas tax from April through December 2022, according to state figures. It was gradually restored over the first four months of 2023.
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How would a gas tax holiday work?
Basically, it would take an act of the legislature signed by the governor to suspend collection of gas and diesel excise taxes. This was how the last gas tax holiday in 2022 was initially approved and then extended two times. The diesel and wholesale oil companies taxes were not suspended then.
The tax holiday was declared when pump prices spiked after the Russian invasion of Ukraine drove up oil prices worldwide beginning in the spring of 2022.
In March 2022, the legislature meeting in regular session approved an initial three-month suspension of the gas tax from April through June. Lamont signed a budget bill in early May that extended the gas tax holiday through Nov. 30.
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Lamont and Democrats then campaigned on the gas tax holiday in the 2022 state elections. After the election, Lamont and the legislature met just days before the Nov. 30 expiration date to approve a plan to suspend gas tax through Dec. 31, and then gradually restore the excise tax in 5-cent increments through April 30, 2023.
The governor has constitutional authority to recall the legislature in a special session. The General Assembly constitutionally can convene itself if a majority of members in both the House and Senate agree. Under state law, individual members can also petition to bring the legislature back in a special session.
Why might a gas tax holiday work?
A gas and diesel tax holiday will provide immediate relief and offer temporary reprieve from the sharpest periodic price spikes. It is broad and simpler than offering a rebate on gas and diesel taxes, for example.
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The last gas tax holiday demonstrated that suspending fuel taxes keeps money in people’s pockets, and gas tax holidays have political appeal, especially to incumbent legislators running for reelection, as the 2022 legislative record demonstrates.
The gas tax holiday saved consumers roughly $330 million between the nine-month suspension of collections and the gradual four-month reintroduction of the full 25-cent-a-gallon tax, according to state figures. It did not cause a deficit in the Special Transportation Fund.
The gas tax holiday overlapped the 2022 and 2023 fiscal years. The state fiscal year runs July 1 to June 30. The comptroller’s office reported that Special Transportation Fund recorded operating surpluses of $156.6 million for the 2022 fiscal year and $281.4 million for the 2023 fiscal year despite the loss of gas tax revenue. It had a fund balance of $679.1 million at the end of the 2023 fiscal year.
The latest projected fund balance of $643.4 million for the current 2027 fiscal year suggests the Special Transportation Fund could absorb the cost of a three-month gas tax holiday that Republicans have proposed.
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A gas tax holiday was politically popular with state legislators four years ago.
The House and Senate both voted unanimously approved the initial three-month suspension of the gas tax in 2022. There was only one Republican vote for the budget bill a few weeks later that extended the tax holiday through Nov. 30. But House and Senate Republicans voted for budget amendments that included a proposal to extend the gas tax holiday to Dec. 31 and suspend the 40.1-cent-a-gallon diesel-fuel tax at that time
Why might a gas tax holiday not work?
The benefits of a gas and diesel tax holiday depend on how much fuel an individual or business buys. People who drive more get larger savings; the policy is not targeted to people who do not drive or own vehicles, or households most in need. Also, 3.3% of state residents of working age commute by public transportation in Connecticut, according to U.S. Census figures.
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A temporary suspension of fuel taxes does not fix supply or price pressures. In 2022, the war in Ukraine drove up global oil prices. Four years later, the war in Iran is causing oil, gas and diesel prices to spike. A tax holiday can also encourage somewhat more fuel use while it lasts.
There are potential public costs to consider. A suspension can leave less funding for roads and transit unless another source replaces it. The 2022 gas tax holiday reduced the funding stream for the Special Transportation Fund.
Fuel tax receipts were down $90 million in the 2022 fiscal year and $82.4 million in the 2023 fiscal year, according to the comptroller’s office. In 2022, the transportation fund collected $111.2 million more in revenue than budgeted, partly because the wholesale fuel tax raised $136.7 million more than anticipated due to higher fuel prices and increased consumption post COVID-19. But overall revenue fell $22.5 million short of the budgeted 2023 target largely due to the gas tax holiday extension and fuel tax collections were down $127.8 million compared to 2022 receipts.
Politics is another obstacle to the Republican proposal for a gas and diesel tax holiday. Lamont and Republicans each pitched a holiday proposal in an election year, the governor roughly eight months before Election Day and the GOP leaders and Fazio a little more than one month out.
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Republican leaders and Fazio have proposed Lamont and Democratic majority leaders not only convene an election-year special session to suspend the gas and diesel taxes, but schedule one in October within five weeks of Election Day. That could hand Republicans a political victory on the eve of the state elections.
Besides, Lamont and Democrats could always wait out the 2026 election and then call a special session to take action, as they did in 2022 after Republicans campaigned for governor and General Assembly on extending the gas tax holiday and including diesel and the oil companies tax, too.