Trump Proposes Suspending Federal Gas Tax as Prices Rise

By [Your Name], Energy and Economy Reporter

*May 13, 2026*

President Trump proposed suspending the 18.4-cent-a-gallon federal tax on gasoline this week, aiming to lower prices at the pump. Such a move would require congressional approval, and the extent of savings for drivers remains uncertain.

The national average price for regular gasoline reached $4.50 a gallon on Tuesday, an increase of more than 50 percent since U.S. and Israeli strikes on Iran began in February. Those strikes followed the exhaustion of diplomatic efforts amid Iran's advancing nuclear program, economic crisis, domestic protests and prior regional conflicts.

The federal gas tax constitutes about 4 percent of the total price at the pump. Here is an overview of the proposal.

What Is the Federal Gas Tax?

Congress enacted the federal fuel tax through the Revenue Act of 1932 under President Herbert Hoover to address general budget deficits. The revenue now supports road maintenance via the Highway Trust Fund.

The gasoline tax rate has remained at 18.4 cents per gallon since 1993; the diesel rate is 24.4 cents per gallon. These fixed rates have not kept pace with inflation or rising maintenance costs, leading to shortfalls in the Highway Trust Fund. Congress has periodically transferred general revenues to cover the gap.

"The idea is funding highway maintenance, but it doesn’t quite fund highway maintenance," said Ted Kury, director of energy studies at the University of Florida’s public utility research center. "Periodically, you’ll find that the government makes additional contributions."

How Much Would Drivers Save?

Suspending the tax would not guarantee a full 18.4-cent reduction per gallon at the pump. The tax is typically collected at fuel terminals before distribution to stations.

Michael Negron, an economics fellow at the Center for American Progress who previously worked on economic policy in the Biden administration, said any relief would depend on producers passing savings to stations and ultimately consumers. "I would think that there would be some reduction — it’s not clear that it would be in the exact amount" of the tax, he said.

In March, the Institute on Taxation and Economic Policy estimated that a suspension would reduce federal revenue by $2.4 billion monthly and save households earning under $53,000 annually about $5 per month.

However, a Penn Wharton Budget Model analysis of state gas tax holidays found pass-through rates to consumers ranging from 58 to 87 percent, depending on market conditions and duration. This suggests drivers could see a substantial portion of the tax relief reflected in lower prices.

Trump acknowledged the limited impact on Monday, calling it "a small percentage" but "still money."

Without replacement revenue, a suspension could reduce Highway Trust Fund contributions, potentially delaying road repairs and increasing vehicle wear over time.

Have Fuel Taxes Been Suspended Before?

No federal gas tax suspension has ever been implemented, despite proposals from multiple administrations. In 2022, amid price spikes following Russia's invasion of Ukraine, President Biden urged Congress to approve a temporary suspension, but lawmakers rejected it.

"Like moving anything in this Congress, you’re going to need the votes to do it," Negron said. "Nobody wants to create a hole in the Highway Trust Fund, and you also have the fact that you can’t guarantee that it’s going to result in lower prices." He added that sustained price increases could prompt lawmakers to reconsider.

The proposal has garnered bipartisan interest this time. Sen. Josh Hawley (R-Mo.) introduced legislation for a temporary suspension, and Energy Secretary [Wright] has expressed openness to the idea if paired with revenue offsets.

What Else Drives Gasoline Prices?

Federal and state taxes together averaged about 18 percent of regular gasoline costs in January, per the Energy Information Administration. Crude oil prices, which account for over half the pump price, are the dominant factor.

State taxes vary widely and can significantly affect totals. As prices have risen, states like Indiana have paused their fuel taxes. Some have permitted sales of cheaper winter-blend gasoline outside its usual season, though many refiners had transitioned to costlier summer blends, which emit less pollution when burned.

Local competition, refining capacity and distribution costs also influence prices. Disruptions from the conflict, including reduced Persian Gulf energy exports, have contributed to recent increases.

"The most important thing that could be done is just a speedy resolution of this conflict," Negron said.

Gas prices have climbed more than 50 percent since February.

*Credit: Justin Sullivan/Getty Images*

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