Trump, lawmakers float gas tax suspension. What it could mean for you
Suspending the federal gas tax could lower prices at the pump. But experts say the move may not provide meaningful relief to consumers and could drain significant federal funding for highway construction and maintenance.
On Monday, President Donald Trump said in an interview in the Oval Office that he would “lower” the tax. CBS News He said he wanted to pause this “for a while.”
Taxes and other fees on retail gasoline and diesel fuel are set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel. US Energy Information Administration.
Reducing or pausing the federal gas tax requires congressional approval, but some Republican lawmakers floated proposals to do so immediately after Trump’s remarks.
Following Trump’s comments, Sen. Josh Hawley, R-Mo., introduced legislation If signed into law, the bill would suspend the federal gas tax on gasoline and diesel fuel for at least 90 days.
“American workers and their families deserve emergency relief, and this legislation will do just that,” Hawley said. he said in a statement.
One x post On the same day, Rep. Anna Paulina Luna, R-Fla., also said she plans to introduce a bill in the House this week to suspend the federal gas tax.
Shortly after the start of the Iran war, Sens. Mark Kelly, D-Ariz. and Richard Blumenthal, D-Conn., in March. announced legislation will temporarily suspend the federal gas tax until October 1. invoice It did not clear the Senate Finance Committee.
Gasoline prices over $6 per gallon are displayed at Chevron and Shell stations in Monterey Park, California, on April 30, 2026.
Frederic J. Brown | Afp | Getty Images
The offers come as Americans prepare for the busy summer travel season. Retail gasoline prices typically rise in the spring and peak in late summer as demand increases, according to the report. US Energy Information Administration.
But some policy experts say suspending the federal gas tax could provide only modest relief at the pump and create long-term fiscal challenges.
“This is a problem that has no easy, short-term solution,” said Adam Hoffer, director of excise policy at the Tax Foundation.
The White House and Senator Hawley’s office did not respond to CNBC’s requests for comment.
What is the federal gas tax?
Under current law, consumers pay 18.4 cents per gallon in federal taxes and other fees for gasoline and 24.4 cents per gallon for diesel.
State tax rates are in addition to the federal tax and range from about 9 cents per gallon in Alaska to about 71 cents per gallon in California. Tax Foundation. As of May 12, in many states Georgia, indiana, Kentucky And Utah – We have taken steps to offer state gas tax relief.
Mark Zandi, Moody’s chief economist, said only a temporary suspension of the federal gas tax could provide “very modest relief” to consumers.
“That 18 cents could be closer to 10 to 12 cents after retailers and distributors get their share,” he said.
“Americans accept it, but it’s really borderline,” Zandi said. “I think this will be a welcome relief, but it is very modest and temporary.”
Gas prices have increased by 50% since the war with Iran began on February 28. Gas prices have increased by 50 percent since February 28, when the war with Iran began. According to Iran, the national average for a gallon of gas is $4.50 as of Tuesday. AAA.
Other data shows that the sudden rise in oil prices and products refined from oil, such as gasoline, has negatively affected the economy and strained household budgets, hitting low-income families especially hard.
According to research closely followed by the University of Michigan, rising gas prices due to the Iran war caused consumer confidence to fall to a new low level in May. Consumer Survey.
‘Financial costs are real’
Federal gas taxes also fund highway construction and maintenance.
“This is relatively small relief, but the financial costs are real,” said the Tax Foundation’s Hoffer.
While the federal gas tax brings in billions a year in revenue, the Highway Trust Fund is increasingly struggling to cover the rising cost of federal infrastructure projects, he said.
“This fund is pretty much underwater in terms of fully funding its own projects,” Hoffer said.
According to certified financial planner Stephen Kates, a financial analyst at Bankrate, any benefit to the consumer may be offset by the risk of these essential services.
Kates said suspending the gas tax “will undoubtedly help consumers in the short term by immediately reducing pump prices.” “But this would also negatively impact tax revenue used for road repairs and other services funded by the gas tax.”
