As summer travel peaks and families hit the road, the idea of a gas tax holiday in New Jersey has surfaced as a potential relief measure for residents grappling with high fuel costs.
Prices could drop as much as 15% overnight.
Governor Phil Murphy, however, has not pursued such a policy in recent years, despite its appeal in neighboring states. This editorial explores why Murphy might be hesitant to implement a summer gas tax holiday and weighs the benefits and costs of such a move.Why Phil Murphy Isn’t Offering a Gas Tax HolidayGovernor Murphy’s reluctance to enact a gas tax holiday likely stems from a combination of fiscal, policy, and political considerations.
New Jersey’s gas tax, currently at 42.3 cents per gallon for regular gasoline, is a critical revenue source for the state’s Transportation Trust Fund (TTF), which finances road, bridge, and transit infrastructure projects. Suspending the tax, even temporarily, could create a significant shortfall—potentially hundreds of millions of dollars over a summer—jeopardizing ongoing and planned infrastructure improvements.
In 2022, when gas prices spiked, Murphy rejected calls for a gas tax holiday, citing the need to maintain funding for transportation projects and expressing skepticism about whether savings would fully reach consumers, as oil companies and gas stations might absorb some of the benefits.Additionally, Murphy’s administration has prioritized long-term fiscal responsibility and progressive policy goals, including investments in clean energy and public transit.
A gas tax holiday could undermine these objectives by encouraging more driving, increasing carbon emissions, and diverting funds from transit initiatives. With a record $58.8 billion budget signed for fiscal year 2026, which includes significant property tax relief and pension funding, Murphy may view the gas tax as a stable revenue stream too vital to sacrifice, especially as he prepares to leave office in January 2026. Political dynamics also play a role: as a term-limited governor, Murphy may be wary of handing his successor a budget deficit or weakened TTF, particularly with the gubernatorial race heating up.Benefits of a Summer Gas Tax HolidayA gas tax holiday offers immediate, tangible benefits for New Jersey residents. With national gas prices averaging around $3.50 per gallon in mid-2025 (based on recent trends), suspending the state’s 42.3-cent tax could save drivers roughly 12% per gallon.
For a family filling a 15-gallon tank weekly, this translates to about $6.35 in weekly savings, or over $75 during a three-month holiday. For commuters and small businesses reliant on transportation, these savings could ease financial strain, particularly for lower- and middle-income households still recovering from inflationary pressures.Beyond economics, a gas tax holiday could boost consumer confidence and stimulate local economies. Summer tourism, a cornerstone of New Jersey’s shore communities, could see an uptick as cheaper fuel encourages more road trips.
Politically, the move could garner bipartisan support, as seen in states like Georgia and Maryland, where temporary gas tax suspensions were popular. For Murphy, it could serve as a populist gesture in his final months, countering criticism of his administration’s tax increases, such as those on cigarettes, luxury homes, and online gaming in the 2026 budget.Costs of a Summer Gas Tax HolidayHowever, the costs of a gas tax holiday are significant and multifaceted. The most immediate concern is the revenue loss. New Jersey collects approximately $2 billion annually from the gas tax, meaning a three-month suspension could cost the state $500 million or more. This could delay critical infrastructure projects, such as bridge repairs or NJ Transit upgrades, which are already strained by rising construction costs. In 2016, when the gas tax was last increased, lawmakers emphasized its role in ensuring the TTF’s solvency—a priority Murphy has upheld.Moreover, a gas tax holiday may not deliver the full savings promised.
Studies from past suspensions, like Connecticut’s 2022 gas tax holiday, showed that gas stations sometimes raised prices to offset the tax cut, reducing consumer benefits. Increased demand from cheaper fuel could also drive prices up, negating savings.
Environmentally, encouraging more driving conflicts with Murphy’s clean energy goals, including his push for offshore wind and electric vehicle adoption. New Jersey’s reliance on gas- and coal-powered plants for electricity, as noted in recent reports, underscores the challenge of balancing affordability with emissions reduction.Politically, a gas tax holiday could invite criticism from progressive allies who prioritize transit and environmental funding, as well as from fiscal conservatives who might argue it’s a short-term gimmick that masks deeper affordability issues, like high property taxes. The 2026 budget’s $6.7 billion surplus could theoretically offset some revenue loss, but Murphy and legislative leaders have prioritized leaving a robust surplus for the next administration, especially with federal funding uncertainties looming.
Striking a BalanceThe debate over a gas tax holiday reflects broader tensions between immediate relief and long-term stability. While the benefits—lower fuel costs, economic stimulus, and political goodwill—are compelling, the costs—revenue shortfalls, infrastructure delays, and environmental setbacks—pose serious risks. A middle ground could involve a targeted holiday, such as a one-month suspension or a partial tax reduction, paired with measures to ensure savings reach consumers, like price monitoring at gas stations.