Will gas prices in Delaware reach record highs? What can drivers do?
Delaware drivers may see gas prices reach record highs. Here are some things they can do to offset the increase.
Could Delawareans soon catch a break at the gas pump?
Several lawmakers in Washington, DC, are considering efforts to enact a federal gas tax holiday, a temporary pause on the federal-level gas tax to help ease prices. Some states have enacted similar holidays or suspensions of their own.
This comes as gas and fuel prices have skyrocketed across the country – including in Delaware – in large part due to the Iran war.
But is a federal tax holiday the solution – and is it even allowed in Delaware?
What is a gas tax – and what is a gas tax holiday?
True to its name, a gas tax is imposed on gasoline at the state and federal levels, according to the Tax Foundation.
These taxes are often used to help pay for projects like road construction and highway maintenance and repair. They can also be used to fund related services like public transportation.
In Delaware, the gas tax – or motor fuel tax – is currently set at 23 cents per gallon. This is in the form of an excise tax imposed on goods and activities like gas, cigarettes, soda and even betting.
This excise tax is collected by and given to the state by licensed suppliers.
Delaware also imposes taxes for the use and sale of special fuel, which is set at 22 cents per gallon, and aviation jet fuel, set at five cents per gallon.
The federal gas tax has a flat rate of roughly 18 cents for each gallon on non-aviation gas and roughly 24 cents for each gallon of diesel fuel. This means Delawareans pay a little over 40 cents in total.
As of May 14, the average price for a gallon of gas in the First State is $4.35, according to a real-time gas price index from AAA.
At least three states – Georgia, Utah and Indiana – have enacted tax holidays or temporary reductions, according to the tax compliance automation company Avalara. Holiday conversations are also taking place in Arizona, Connecticut and neighbor state Pennsylvania.
But the same can’t be said for the First State.
Can Delaware also implement a gas tax holiday?
As of now, lawmakers have not introduced nor considered implementing a similar tax holiday in the First State.
Delaware is barred from suspending the state portion of the motor fuel tax, even for a short period of time, according to the state code.
That is because the state Department of Transportation’s three main sources of revenue – the gas tax, toll charges and Division of Motor Vehicle fees – are pledged to bonds. This is what helps give the state its high bond rating, which means the risk of Delaware being unable to repay borrowed funds is low.
Bond ratings often serve as an indicator of a state government’s ability to pay debts, like a credit score.
As such, putting the gas tax on hold would mean a reduction in a key source of revenue and what was committed to pay those bonds back, putting the entity in violation of its trust agreements, according to the department.
Even if those debts were repaid, it would still be considered a violation, which in turn could affect Delaware’s rating down the line.
This could also make it more difficult for the department to secure money to meet infrastructure needs.
In short, lawmakers cannot pass a bill enacting a statewide gas tax holiday, unless bonds are readily available to brace the impact.
But even if that were the case, many lawmakers say it may do more harm than good.
House Minority Leader Tim Dukes had considered suspending the gas tax for a few months during the COVID-19 pandemic, but it never came to be.
This was because a potential pause could negatively impact Delaware’s bond rating.
Delaware has AAA/Aaa bond ratings as of May 12, the equivalent of a perfect credit score. If ratings dip, Delaware’s ability to borrow money would be at risk, Dukes said.
Instead, leaders launched the Delaware Relief Rebate Program, which gave First State taxpayers a one-time payment of $300 amid higher gas and grocery prices post-pandemic.
But that was accomplished through one-time federal assistance – assistance that is currently unavailable, said House Minority Whip Jeff Spiegelman.
This means if the state were to make a similar move today, they would need to have one-time funds at the ready, or risk Delaware’s bond rating – which is considered by many lawmakers to be “a non-starter,” according to the Clayton Republican.
House Majority Leader Kerri Evelyn Harris echoed this, saying if lawmakers could temporarily suspend the gas tax, it may not be worth the gamble.
“If there were a lever to pull, the question is, is that good governance, knowing that it could sacrifice our bond rating going into what is uncertain economic times going forward?” the Dover Democrat said.
There is also concern about how a tax holiday would impact Delaware’s Transportation Fund, which is used to help finance infrastructure projects across the state and paying back bond debts, among other purposes. Projects and other initiatives are fueled by money collected through toll charges, license and registration fees and yes, the gas tax.
In fiscal year 2023, motor fuel taxes brought in $136.1 million, roughly 22% of total revenue for that year, behind only toll charges and motor vehicle document fees.
If there’s a state gas tax holiday in place, Dukes said, this could in turn jeopardize Delaware’s infrastructure.
“It’s not something that you really want to play around with,” the Laurel Republican said.
‘Like a Band-Aid on a broken arm’
In the nation’s capital, both Democrats and Republicans are considering efforts to launch a federal gas tax holiday.
This includes the Gas Prices Relief Act of 2026, which proposes suspending the gas tax until Oct. 1. A similar bill was also introduced in the House.
Another U.S. Senate bill proposing a 90-day pause on the federal gas tax and diesel tax was also introduced this month. At least one other U.S. House Representative has said they would introduce a similar piece of legislation as of May 12.
If this or a similar measure becomes law, it would take effect in Delaware, according to the Transportation Department.
A spokesperson for U.S. Rep. Sarah McBride, Delaware’s lone representative in the House, said in a statement that while the congresswoman does support a federal tax holiday to help reduce costs for residents, she also believes the quickest way to ensure lasting relief is for President Donald Trump to end the war with Iran once and for all.
U.S. Sen. Lisa Blunt Rochester is “skeptical” about how beneficial a federal tax holiday would be, as it would most likely help the fossil fuel enterprise than hard-working residents.
“This short-term attempt to fix the issue by the President is like putting a Band-Aid on a broken arm,” the senator said in a statement.
Olivia Montes covers state government and community impact for Delaware Online/The News Journal. If you have a tip or a story idea, reach out to her at [email protected].
