The Trump administration’s proposal to pause the federal gasoline tax is expected to provide only slight relief for American drivers facing escalating fuel prices, as noted by tax and energy analysts.
Currently, U.S. motorists are experiencing the highest gasoline prices since 2022, with costs rising approximately $1.54 following the U.S. and Israel’s military actions against Iran in late February. According to AAA, the average price for a gallon of gasoline reached $4.52 on Monday.
During an interview with CBS News correspondent Nancy Cordes, President Trump expressed support for the temporary suspension of the gas tax. “I think it’s a great idea… We’re going to eliminate the gas tax for a while, and as gas prices decrease, we’ll gradually reinstate it,” he stated.
Experts suggest that halting the gas tax would likely offer minimal relief, given that the recent price hikes have significantly surpassed the federal tax rate. The U.S. government imposes a tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel, which funds the Highway Trust Fund.
If the tax were suspended, the price of regular gasoline would drop to $4.34 per gallon, while diesel would fall to $5.39 per gallon, reverting to prices seen in early May. Nonetheless, these figures still represent a 46% increase compared to pre-war levels in Iran.
Andrew Lautz, the director of tax policy at the nonpartisan Bipartisan Policy Center, commented on social media, “The irony of a gas tax suspension is that as prices rise, its impact diminishes.” He noted that filling up a sedan now costs $18 to $25 more than prior to the conflict, while a federal gas tax holiday would save drivers only about $2 per fill-up.
Drivers can estimate their savings using a tax calculator developed by Lautz. For instance, an SUV owner in California could see savings between $2.36 and $3.09 per fill-up if the federal tax were lifted. However, this driver would still be spending approximately $24 to $32 more per tank since the onset of the Iran conflict.
Because the federal fuel tax is subject to legislation, Congress must approve any suspension, a challenging task given the current political polarization and the upcoming Midterm elections.
The proposal may also encounter opposition, as it would impact the Highway Trust Fund significantly. GasBuddy analyst Patrick De Haan predicts that the suspension could lead to a loss of about $2.1 billion in federal revenue each month.
Some states have proactively opted to eliminate their local fuel taxes, including Georgia, Indiana, and Utah. With state fuel taxes varying from 15 to 60 cents per gallon, these local suspensions could provide more substantial relief than a federal tax pause, according to experts.
De Haan noted in a social media update on May 10 that “Indiana is experiencing significant drops in gas prices due to the state’s waiver of the use and excise tax, with motorists benefiting from nearly a 60-cent per gallon reduction, and prices falling below $4 at some locations.”
Nevertheless, some lawmakers at the state level have been reluctant to remove gas taxes due to concerns regarding the impact on funding necessary for road maintenance.
Edited by Alain Sherter
