Is Propane Taxable In California?

  • Other than fuel subject to the diesel fuel or motor vehicle fuel tax, any other combustible gas or liquid, by whatever name the gas or liquid may be known or marketed, of a kind employed in an internal combustion engine for the generation of power to propel a motor vehicle on the roadways.

Alternative Fuel Tax

The excise tax on compressed natural gas (CNG), liquefied natural gas (LNG), and propane used to power a vehicle can be paid through an annual flat rate sticker tax based on the vehicle weights listed below:

Owners and operators of CNG vehicles can pay an excise tax of $0.0887 per gasoline gallon equivalent (GGE) measured at standard pressure and temperature, $0.1017 every LNG diesel gallon equivalent (DGE), and $0.06 per gallon of propane. One GGE equals 126.67 cubic feet or 5.66 pounds of CNG, while one DGE equals 6.06 pounds of LNG. The excise tax on ethanol and methanol fuel blends including up to 15% gasoline or diesel fuel in California Revenue and Taxation Code section 8651 is one-half of the rate on gasoline and diesel.

(See California Revenue and Taxation Code 8651-8651.8, as well as California Business and Professions Code 13404 and 13470 for more information.)

Alternative Fuel Vehicle (AFV) Parking Incentive Programs

The California Department of General Services (DGS) and the California Department of Transportation (Caltrans) are required to develop and implement AFV parking incentive programs in DGS-operated public parking facilities with 50 or more parking spaces, as well as Caltrans-owned and operated park-and-ride lots. Drivers must receive substantial and visible benefits from the incentives, such as priority parking, lower fees, and improved fuelling infrastructure. Those who use bicycles, public transportation, or ridesharing are not barred from accessing the fueling infrastructure provided at park-and-ride facilities. (See California Public Resources Code 25722.9 for more information.)

Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Grants

The Motor Vehicle Registration Fee Program (Program) offers money for programs that minimize on- and off-road vehicle pollution. Purchasing AFVs and establishing alternative fuelling infrastructure are examples of initiatives that are eligible. Contact local air districts for more information, including grant money and distribution, and visit the Program website for more information on available grant funding and distribution. (See California Health and Safety Code 44220 (b) for further information.)

Alternative Fuel and Hybrid Electric Vehicle Retrofit Regulations

Converting a vehicle to run on an alternative fuel instead of gasoline or diesel is illegal unless the retrofit system has been assessed and certified by the California Air Resources Board (CARB). Once the maker of the system establishes compliance with the emissions, warranty, and durability standards, CARB will provide certification in the form of an Executive Order. A manufacturer is defined as a person or company that designs, fabricates, or assembles an alternative fuel retrofit system for sale in California; this definition excludes individuals who want to convert their automobiles for personal use. Individuals who want to convert their automobiles to run on alternative fuels should make sure that the alternative fuel conversion systems they select are CARB certified. Visit the CARB Alternative Fuel Retrofit Systems page for additional information.

If the manufacturer demonstrates compliance with emissions, warranty, and durability criteria, a hybrid electric vehicle with a Model Year 2000 or newer that is a passenger car, light-duty truck, or medium-duty truck may be upgraded to include off-vehicle charging capability. The manufacturer receives certification from CARB, and the car must meet California emissions regulations for the model year of the vehicle.

(See California Vehicle Code 27156 and California Code of Regulations Title 13, Section 2030-2032.)

Alternative Fuel and Vehicle Policy Development

On a biannual basis, the California Energy Commission (CEC) is required to develop and submit an Integrated Energy Policy Report (IEPR) to the governor. The IEPR gives a broad assessment of the state’s primary energy trends and concerns, including transportation fuels, technology, and infrastructure. The IEPR also considers the impact of alternative fuels, vehicle efficiency improvements, and mode shifts on public health and safety, the economy, resources, the environment, and energy security. The major goal of the IEPR is to create energy policies that conserve resources, protect the environment, ensure energy reliability, boost the state’s economy, and safeguard public health and safety.

The CEC must incorporate measures to maximize the benefits of natural gas in diverse sectors in the IEPR starting November 1, 2015, and every four years thereafter. The usage of natural gas as a transportation fuel is an example of this. See the 2020 Integrated Energy Policy Report for further information. (California Public Resources Code Sections 25302 and 25303.5)

Fleet Emissions Reduction Requirements – South Coast

The South Coast Air Quality Management District (SCAQMD) mandates that government fleets and commercial contractors working for public entities purchase non-diesel, low-emission cars. The law applies to transit bus, school bus, garbage hauler, and other vehicle fleets operating in Los Angeles, San Bernardino, Riverside, and Orange counties with at least 15 vehicles. (See SCAQMD Rules 1186.1 and 1191-1196 for more information.)

Low Emission Vehicle (LEV) Standards

Model year (MY) 2004 and subsequent model year passenger automobiles, light-duty trucks, and medium-duty passenger vehicles that satisfy specified exhaust criteria are subject to California’s LEV II exhaust pollution standards. When operating on an alternative fuel, the LEV II regulations indicate the maximum exhaust emissions for LEVs, Ultra LEVs, and Super Ultra LEVs, including flexible fuel, bi-fuel, and dual-fuel vehicles. Passenger cars, light-duty trucks, and medium-duty passenger vehicles sold in MY 2009 and following model years must fulfill specific fleet average greenhouse gas (GHG) exhaust emission limits. These fleet average GHG criteria, which are based on California Air Resources Board (CARB) estimations, must be met by each manufacturer. Alternative compliance methods may be available for bi-fuel, flexible fuel, dual-fuel, and grid-connected hybrid electric vehicles.

CARB established regulatory criteria known as LEV III in December 2012, allowing vehicle manufacturers’ compliance with the US Environmental Protection Agency’s GHG regulations for MY 2017-2025 to count toward California’s accepted GHG emissions requirements for those model years. For further information, visit the webpages for the CARB LEVII and LEV III Programs. (See Section 1961-1961.3) of the California Code of Regulations.

Mobile Source Emissions Reduction Requirements

The California Air Resources Board (CARB) has developed programs and rules to minimize emissions from on-road heavy-duty diesel vehicles by installing verified diesel emission control strategies (VDECS) and vehicle replacements under its Mobile Sources Program.

Nearly all privately owned vehicles operated in California with a gross vehicle weight rating (GVWR) more than 14,000 pounds must be retrofitted and replaced under the on-road heavy-duty diesel vehicle rule (i.e., truck and bus regulation) (lbs.). The rule also applies to school buses operated by commercial and governmental enterprises, as well as federal government vehicles. Nearly all vehicles must have engines certified to the 2010 engine standard or equivalent by January 1, 2023. The drayage truck rule governs the transportation of cargo to and from California’s ports and intermodal rail facilities using heavy-duty diesel-fueled trucks. Certain drayage trucks must be fitted with VDECS, and all applicable vehicles must have engines that meet the 2007 emissions regulations. All relevant vehicles must have engines certified to 2010 specifications by January 1, 2023. The solid waste collection vehicle rule applies to vehicles that have a gross vehicle weight rating of 14,000 lbs. or more, run on diesel fuel, have engine models from 1960 to 2006, and collect rubbish for a fee. To meet emissions limits by stated implementation dates, public agencies and utilities must install VDECS on cars or purchase vehicles that run on alternative fuels or use sophisticated technologies.

State Agency Low Carbon Fuel Use Requirement

At least 3% of the total volume of bulk transportation fuel purchased by the state government must come from sources with very low carbon emissions. Until January 1, 2024, the required amount of very low carbon transportation fuel purchased will grow by 1% annually. The California Department of General Services may rule that certain exemptions apply (DGS). A very low carbon fuel is one that has no more than 40% of the carbon intensity of the closest similar petroleum fuel for that year, as evaluated by the methods outlined in California Code of Regulations Title 17, Sections 95480-95486. The California Legislature will receive an annual status report from the Department of General Services. (See California Health and Safety Code 43870, as well as Title 17, Section 95480-95486, of the California Code of Regulations.)

State Transportation Plan

Beginning December 31, 2020, the California Department of Transportation (Caltrans) must publish a California Transportation Plan (Plan) every five years. The Plan must detail how the state will achieve the greatest possible reductions in emissions, taking into account alternate fuels, new vehicle technology, and tailpipe emissions reductions. Caltrans must work with other state agencies, air quality control districts, public transportation providers, and regional transportation planning organizations to consult and coordinate. Caltrans must also provide the public a chance to comment. Caltrans must present the legislature and governor with a final draft of the Plan. On the Caltrans website, you can get a copy of the 2020 report. Every five years, Caltrans must review the Plan and provide a report to the legislature and governor with practical, programmatic transportation system improvement suggestions. (See California Government Code 65070-65073 for more information.)

Vehicle Acquisition and Petroleum Reduction Requirements

The California Department of General Services (DGS) is in charge of maintaining criteria and regulations for passenger cars and light trucks acquired or leased for use by state offices, agencies, and departments. Minimum vehicle emissions regulations are included in these specifications, which encourage the purchase or lease of fuel-efficient and alternative-fuel cars (AFVs). DGS must, in particular, reduce or replace the fleet’s petroleum product usage by 20% by January 1, 2020, compared to 2003 consumption levels. Beginning in fiscal year 2024, the Department of General Services shall ensure that at least half of the state’s light-duty vehicles are zero-emission cars (ZEVs). Furthermore, by 2025, at least 15% of DGS’ new vehicles with a gross vehicle weight rating of 19,000 pounds or more must be ZEVs, and by 2030, at least 30%.

DGS is required to compile data on a yearly basis, including the number of AFVs and hybrid electric cars purchased, the locations of alternative fuel pumps available for such vehicles, and the total amount of alternative fuels used. Vehicles owned or leased by the state that are capable of running on alternative fuel shall do so unless the alternative fuel is unavailable. In addition, DGS is required to:

  • Take steps to guarantee that the most fuel-efficient vehicles are used and that the least fuel-efficient vehicles are removed from the state’s motor vehicle fleet by transferring vehicles between agencies and departments;
  • Annual progress reports should be sent via the DGSwebsite to the California Department of Finance, relevant legislative committees, and the general public.
  • Encourage other agencies, to the degree possible, to operate AFVs on the alternative fuel for which they were intended;
  • Encourage the construction of commercial fuelling infrastructure at or near state vehicle fueling and parking facilities.
  • To the extent possible, collaborate with other agencies to incentivise and promote the use of AFVs by state employees through preferential or reduced-cost parking, access to electric vehicle charging, or other measures; and

In California, is there a sales tax on gasoline?

The federal gas excise tax of 18.4 cents must be assessed by all sellers. This is in addition to the state’s extra taxes and levies.

California’s gas tax is currently 51.1 cents per gallon, with another increase due in July.

Let’s talk about the costs now. There are three costs that you pay for petrol, according to Stillwater Associates, an agency that deals with transportation fuels markets.

The price for an Underground Storage Tank is around 2 cents per gallon. This fee goes to a fund that provides “financial assistance to the owners and operators of underground storage tanks to remediate conditions caused by leaks, reimbursement for third-party damage and liability, and assistance in meeting federal financial responsibility requirements,” according to the website.

The Fuels Under the Cap tax is around 15 cents per gallon and is part of the state’s Cap & Trade (C&T) policy, which aims to reduce greenhouse gas emissions.

Finally, the price for the Low Carbon Fuel Standard is approximately 22 cents per gallon. This is due to the fact that California is the only state where special fuel blends are required. Producing it is more expensive, which raises the price at the pump.

Per gallon of gas, you will spend an average of $1.19 in taxes and fees.

Finally, let’s talk about margins. The cost of a gallon of gas varies depending on the store’s location, surrounding competition from other businesses and shops, and the gasoline brand sold.

According to the NCAS, for example, “In the United States, gas sales at convenience stores account for 53% of total revenue but just 42% of profit. To put it another way, petrol sales drive consumer traffic, but in-store sales drive the businessand prepared food sales are increasingly driving in-store sales.”

In California, what isn’t taxable?

While the California sales tax of 6% applies to most transactions, there are certain items that may be exempt from taxation. This page details California’s different sales tax exemptions.

Sales Tax Exemptions in California

Certain items in California may be excluded from sales tax for all consumers, not just tax-exempt buyers.

Prosthetics and other medical items are exempt from sales tax. Additionally, certain groceries, hot drinks, certain farm commodities, and certain alternative-energy devices are free from the California sales tax.

For certain categories of staple commodities, such as groceries, clothing, and pharmaceuticals, many states offer special, lower sales tax rates. Restaurant meals may be subject to a different sales tax rate. California’s special category rates are as follows:

What is not subject to the California sales tax?

California law exempts some customers from paying sales tax. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale. To validate each exempt transaction, sellers must obtain a valid exemption or resale certificate from buyers.

In California, are propane firms regulated?

The public utility model is ineffective for propane supply for a variety of reasons. First, propane dealers lack the characteristics of a public utility: they do not deliver propane to customers through permanent physical connections, they do not have an exclusive service territory in which the state has granted them permission to operate, they are not monopolies, and they do not have eminent domain authority. Regulated public utility service providers, on the other hand, supply their services via a permanent physical link and are licensed by the state to operate as monopolies exclusively within a specific service territory. Such characteristics need price and service regulation by these businesses.

What is the current gas tax in California?

California’s gas tax is presently 51.1 cents per gallon, and under Senate Bill 1, implemented in 2017, it is increased annually, in part to keep up with inflation. The funds received will be used to keep roads in good repair.

The annual gas tax raise is expected to take place on July 1, 2022, with a 5.6 percent increase, bringing it to 53.9 cents per gallon, a 2.8 cent increase.

That’s almost 40 cents for a typical 14-gallon fuel tank, not a lot, but not nothing, especially for individuals and families struggling with rising costs across the board, exacerbated by global supply chain issues, exacerbated by the war in Ukraine, which has sent gas and energy prices soaring in particular.

According to the AAA Gas Price Monitor, the current average gas price in California is $5.72 per gallon. This is a significant increase over the national average of $4.18.

Who in the United States has the highest gas tax?

California has the highest gasoline tax rate in the country. California’s gas tax was 68 U.S. cents per gallon in March 2022, compared to a total gas price of 5.79 U.S. dollars a gallon. Meanwhile, Alaska had the lowest gas tax of any US state in 2021, at 14 cents.

Is the California gasoline surcharge taxable?

You charge a separate fee for gasoline surcharges, “handling,” and so on. Separately stated charges are often taxed in addition to the actual shipping charges. See the part above on one “shipping and handling” charge. You include the cost of delivery in the item’s unit price.

What are three non-taxable items?

Whether or whether you declare nontaxable income on your tax return, it will not be taxed. The IRS considers the following items to be nontaxable:

  • When someone dies, the money you get from a life insurance policy is not taxable. If you cash in a life insurance policy, however, a portion, if not all, of the proceeds will almost certainly be taxable.
  • A eligible scholarship’s funds are not taxed. If you use the money to pay for housing and board or other personal expenditures, however, that amount is usually taxable.

What items are subject to taxation in California?

The California State Board of Equalization has released detailed information on how the sales and use tax in California affects food retailers. It’s a must-read for California grocery shop owners, managers, and other operators.

For sales and use tax purposes, a grocery shop is defined as “an entity whose primary line of business is the selling of food products and related commodities.” Country stores and general stores, as well as delicatessens, are not considered grocery stores in California. Separate grocery departments within department shops, on the other hand, are considered grocery stores.

These days, grocery stores sell a lot more than just food, and the taxability of what they sell isn’t always obvious. The BOE report is over 30 pages long and contains far too much information to be fully digested here. There are, however, neat lists of taxable and nontaxable groceries.

  • If sold at retail, fixtures and equipment utilized in an activity requiring the holding of a seller’s permit;
  • Over-the-counter medicines, including aspirin, cough syrup and throat lozenges;

In California, sales of food for human consumption are normally tax-free. Furthermore, the following items are frequently exempt from California sales tax:

  • Baby food, artificial sweeteners, sweets and gum, ice cream and ice cream novelty items, popsicles, fruit and vegetable juices, olives and pickled onions, and maraschino cherries, as well as non-alcoholic and non-carbonated beverage and cocktail mixes;

The BOE has more information on how sales tax relates to purchases made in California grocery retailers.