How does the Gas Tax Swap apply to motor vehicle fuel?
Beginning July 1, 2010, the retail sale of motor vehicle fuel is partially exempt from sales and use tax. The partial exemption applies to 6 percent of the current state sales and use tax rate. Therefore, retail sales on or after July 1, 2010 are subject to sales and use tax at a rate of 2.25 percent plus applicable district taxes. Additionally, beginning July 1, 2010, the state excise motor vehicle fuel tax goes up by 17.3 cents ($0.173) per gallon. As of July 1, 2010, the new state excise motor vehicle fuel tax rate is 35.3 cents ($0.353) per gallon. However, the increased state excise motor vehicle fuel tax does not apply to aviation gasoline. Aviation gasoline will continue to be subject to the original state excise motor vehicle fuel tax rate of 18 cents ($0.18) per gallon. Retail sales of aviation gasoline will continue to be exempt from sales and use tax (Revenue and Taxation Code section 6357).
