Ohio cuts gas and diesel taxes to 0.01 cent per gallon

Ohio’s state gasoline and diesel tax rates fell to 0.01 cent per gallon for a 90-day period beginning Oct. 4 under HB 519. The previous rates were 38.5 cents per gallon for gasoline and 47 cents for diesel. The law requires dealers to pass the full benefit of the reduced rates to consumers and other purchasers.

Gov. Mike DeWine signed the bill Oct. 1, which the Ohio Legislature lists as its effective date. The enrolled law makes the temporary rates applicable at 12:01 a.m. Oct. 4. That statutory change does not establish what customers paid at individual stations.

The reduction applies to the state tax rate, not to the full price of fuel. The law establishes the rate change and requires dealers to pass along its full benefit, but the amount a customer pays at a station can’t be determined from the statutory rate alone.

The measure drew contrasting explanations from lawmakers. Republican state Sen. Michele Reynolds said it would provide relief to drivers amid rising fuel prices, according to The Associated Press. Democratic state Rep. Allison Russo criticized the measure as an election-year stunt and estimated average savings of $55 over three months. That figure is Russo’s estimate, not a measured outcome.

Dealer rules cover fuel sold during and after the reduction

HB 519 provides a payment procedure for licensed retail dealers selling qualifying gasoline or diesel during the 90-day period. The fuel must have been in the dealer’s possession when the period began or received during it. Dealers may claim the difference, if any, between the ordinary tax paid or due and the temporary rate on qualifying fuel sold at retail during the period.

The payment procedure is limited to qualifying fuel sold during the reduction period; it is not a general refund for all fuel a dealer handles. The law ties eligibility to when the dealer possessed or received the fuel and to its retail sale during the temporary-rate period.

A separate provision applies to qualifying fuel taxed at the temporary rate but sold at retail after the reduction period ends. For those sales, the law imposes a dealer excise tax of 38.49 cents per gallon for gasoline and 46.99 cents for diesel. That provision does not impose those rates on all fuel purchases made during the 90-day period.

Applications for qualifying dealer payments and remittances under the post-period tax provision are due March 1, 2027. During the reduction period, dealers may not sell fuel without passing the full reduced-rate benefit to the purchaser. Violations may be considered in licensing decisions and referred to the Ohio attorney general for enforcement as an unfair or deceptive act.

State funds receive $725 million

HB 519 appropriates $725 million from Ohio’s General Revenue Fund to replace revenue directed to specified motor-fuel-tax funds during the reduction period. The funds are identified in Chapters 5728 and 5735 of the Ohio Revised Code. The appropriation is public funding for those funds, not savings paid to drivers.

The bill separately appropriates $250,000 for tax administration. Its funding provisions accompany the temporary tax rates and dealer requirements; the March 1 deadline applies to the specified dealer claims and tax payments.