The state's gross receipts tax on petroleum products, a levy on wholesale earnings from gas sales, had been slated to climb from 7 percent to 7.5 percent on July 1.
Gas station dealers predicted the increase, which would have generated $25 million for the state, would have boosted gas prices by up to 5 cents per gallon.
"Finally, the consumers of Connecticut are getting a bit of a break from the bruising price of gasoline," Rell said at Tuesday's bill-signing event.
The General Assembly voted last week to rescind the gas tax increase - originally implemented to help pay for transportation improvements - and pass the cash-discount measure aimed at helping consumers.
It's unclear how many stations, if any, will offer discounts for cash-paying customers.
Questions remain unanswered about how many are barred from the practice by their franchise agreements with the oil companies, although state authorities say the new law overrides those agreements.
"From what we've learned, it's not in a lot of those agreements," said Steven Guveyan, executive director of the Connecticut Petroleum Council.
Rell sent a letter Tuesday to more than 1,000 gasoline dealers in the state to inform them of new law. She said any station that runs into difficulties with its parent companies over offering cash discounts should contact the state Department of Consumer Protection.
According to AAA, the average price for a gallon of regular unleaded gas in Connecticut was $4.38 on Tuesday. In addition to the state's gross receipts tax, there is also a fixed tax of 25 cents per gallon in Connecticut.
