Orange County moves to cap sales tax on fuel

Orange County drivers would save only about 4 cents a gallon under a temporary cap on the county sales tax for gasoline and highway diesel, a break that works out to roughly 60 cents on a 15-gallon fill-up when regular fuel in New York is running around $4.10 a gallon. The relief is modest, but county lawmakers are betting it is still enough to matter through March 1, 2027, if prices stay above the $3 threshold.

The county legislature’s Rules Committee voted Wednesday to cap the tax on fuel above $3 per gallon, with the measure set to take effect on June 1. Stephen Hunter said the county could lose more money by standing apart from neighboring Hudson Valley counties that already adopted similar caps than it would by matching them now.

That regional pressure has been building for years. In 2022, Gov. Kathy Hochul announced a statewide gas and diesel tax suspension that took effect June 1, and 25 counties chose to cap their local sales tax on fuel, using either a $2-per-gallon or $3-per-gallon limit. Ulster County went back to that playbook again on April 21, approving a $3 cap in a local resolution that limited county tax calculations to receipts based on $3.00 a gallon.

Orange County’s own tax structure helps explain why the issue is politically sensitive. The county sales tax rate is 3.75 percent, and the total sales tax rate is 8.125 percent. When fuel climbs above the cap, the county no longer collects tax on the portion above $3, trimming revenue but giving commuters, families and small businesses a small cushion at the pump.

County officials estimate the temporary cap will reduce revenue by about $460,000 while it is in effect. The timing also reflects the market backdrop: AAA listed New York’s average regular gasoline price at $4.100 per gallon on April 23, and the U.S. Energy Information Administration put the state average at about $4.004 per gallon on April 20.

Orange County has taken this path before. A 2006 report on a proposed gas-tax cut said the legislature had previously advanced a plan to cap the local sales tax on gasoline when fuel reached $2 per gallon, showing that in Orange County, fuel prices have long pushed county government toward the same uncomfortable choice: some relief for drivers now, or more revenue for the budget later.