Holiday relief at the pump: NJ gas dips below $3 — but brace for Jan. 1 tax hike

☑️ Gas prices drop below $3 as New Jersey drivers get a holiday break

☑️ Experts say prices could be the lowest since 2020 heading into Christmas

☑️ The state gas tax hike on Jan. 1 will quickly erase some of the savings

New Jersey drivers are getting an early holiday gift in the form of lower prices ahead of the state gas tax increase.

Patrick DeHaan, head of petroleum analysis for Gas Buddy, told New Jersey 101.5 gas prices by Christmas Day nationwide will likely fall to their lowest level since 2020. In New Jersey, the statewide average has fallen below the $3 a gallon mark. There are two major factors in the decline, according to DeHaan.

"A fall in oil prices as OPEC has raised production is contributing to the decline. In addition, the weak seasonal demand for gasoline as Americans start to stay a little closer to home and temperatures cool off, that seasonal decline almost always leads to gas prices declining this time of year," DeHaan said.

Prices should stay low through the winter and then head back up in the spring.

ALSO READ: Holiday safety messages back on NJ highways

Gas tax increase coming Jan. 1 will raise prices overnight

The lump of coal for drivers will be the 4.2 cents a gallon increase in the gas tax on Jan. 1, 2026  to 49.1 cents per gallon. The gas tax for diesel trucks and pickups will be 56.1 cents.

"That's something that retailers have no margin to be able to swallow any tax increase on gasoline, and they pass along to the end users, so motorists will likely see a nearly similar 4.2-cent increase right on or around New Year's Day," DeHaan said.

The increase will put New Jersey into the top five when compared to current rates in other states, according to a Tax Foundation study. Until the tax went up 23 cents on Nov. 1, 2016 thanks to then-Gov. Chris Christie, New Jersey's gas tax was among the lowest. Drivers would specifically fill up here to get the lowest price.

"This is going to further close the gap between more of your high-tax neighbors in Pennsylvania and New York, and it's also going to make it much more alluring to head over to Delaware for those who can with lower taxes there. So unfortunately, this is kind of the reality," DeHaan said.

Previous reporting by Rick Rickman was used in this report

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