Momentum appears to be building for a push to suspend or eliminate the 18-cent-per-gallon federal gas tax to help drivers suffering from high prices at the pump due to the Iran war.
The largest lobbying group for carmakers in Washington, the Alliance for Automotive Innovation, came out in favor of a plan to eliminate the federal gas tax in favor of a new vehicle fee that would be based on the weight of cars.
“Depending on how long this current global oil shock lasts, I do expect to see a consumer shift toward more fuel-efficient vehicles,” John Bozzella, president of the Alliance, which lobbies for most major automakers such as Ford, General Motors, Stellantis, Honda and Toyota, wrote in a blog post. “That’s likely to accelerate the insolvency of the Highway Trust Fund – the government’s dedicated account to build, fix and maintain America’s transportation infrastructure.”
The comments follow similar statements from President Trump and some U.S. lawmakers that have floated the idea of suspending the federal gas tax to help drivers who are now feeling the pinch at the pump.
“The gas tax — you know, people have talked about it,” Trump said when he was asked recently if he is considering the idea of suspending the gas tax collected by the federal government since the 1930s. “It’s something we have in our pocket if we think it’s necessary.”
A pair of Democratic lawmakers in the U.S. Senate also introduced legislation on March 13 that called for the suspension of the federal gas tax until October 1 in light of the nation’s escalating gas prices.
The USA TODAY Cars team took a look at what it takes to suspend or eliminate the federal gas tax and how likely that is to come to fruition.
How much gas taxes does the federal government collect?
The federal government has been collecting taxes on every gas purchase made at a U.S. station since the 1930’s. The current rate of 18.4 cents-per-gallon was established by a law that was passed by Congress in 1993. Transportation funding advocates have lamented the fact that Congress has not moved to increase the gas tax in over three decades.
The gas tax is typically authorized by Congress each time it adopts a federal highway funding bill because the revenue it generates is used to fund the U.S. Department of Transportation’s Highway Trust Fund, which is distributed to states to help pay for road and transit construction projects.
The federal gas tax was first established in 1932 at a rate of 1 cent per gallon. It has been increased multiple times since then by Congress, and some lawmakers have called to tie it to inflation, as votes to increase taxes have become politically difficult for lawmakers to stomach because of voters.
Most states also tack on their own gas taxes to fund local road projects.
Why is the carmaker lobby coming out in favor of ditching the gas tax?
Bozzella, the Auto Alliance president, noted that “traditional gas vehicle market share is down 24 percentage points since 2016. Hybrids were 19 percent of sales in January 2026.” He also added that online searches for EVs are up 20% since the Iran War began.
“So, we might see a shift in the marketplace,” he said. “Congress is looking at a five-year highway and transportation funding bill right now. That’s the perfect time to consider a policy change that does two things at once: brings down the cost of gas and shores up the trust fund for our fuel-efficient gas vehicle, hybrid and electric vehicle era. Here’s the idea: What if we scrapped the federal gas tax and replaced it with a single fee on every vehicle based on weight?”
Bozzella said his proposed vehicle fee would be “like a registration fee. Straightforward. And easy to collect.”
“This policy would guarantee every vehicle on the road contributes something to maintaining America’s transportation network,” Bozzella wrote. “Right now, millions of drivers pay little (or nothing at all) to the trust fund – even though they use the roads. Those driving older, less fuel-efficient vehicles or who travel long distances bear the financial burden. That’s not fair.”
The federal gas tax hasn’t been increased since 1993, and it only brings in about $40 billion per year at its current level, according to the Tax Policy Center. The federal government typically spends about $60 billion on transportation projects, and infrastructure advocates say the amount is barely enough to maintain the nation’s roads and transit systems. Most states also levy their own gas taxes to fund local road projects.
Infrastructure advocates have said that eliminating the gas tax without a replacement like Bozzella’s proposed vehicle fee would decimate federal funding for road improvements, which would also lead to increased maintenance costs for drivers.
“Any changes to our current approach to funding must pass a litmus test: it has to be reliable while also generating sufficient revenue; it should be seamless to administer while protecting privacy,” Brittney Kohler, legislative director of transportation and infrastructure services for the National League of Cities, wrote in a blog post. “Most of all, it must pass the fairness and affordability test,” she said. “Most of the discussed user fee revenue tools today fail these basic test points for most Americans.”
What would it take to eliminate or suspend the gas tax?
A suspension or elimination of the federal gas tax would require an act of Congress since the collection of the levy was authorized by lawmakers in previous highway funding bills.
The idea is being floated now because the current federal highway funding bill that was included in former President Joe Biden’s signature bipartisan infrastructure bill that was passed in 2021 is now set to expire on Sept. 30.
The last time Congress took a vote to do anything other than reauthorize the gas tax at its current 18.4 cents-per-gallon level was 1993.
Since the tax was first implemented at a rate of 1 cent-per-gallon in 1932, Congress has voted to increase the fuel levy nine times, including the most recent vote in 1993, according to the Congressional Research Service.
In that same time span, lawmakers have only voted twice to lower the federal gas tax, once going from 1.5 cents-per-gallon to 1 cent-per-gallon in 1934 and once going from 9.1 cents-per-gallon to 9 cents-per-gallon in 1987.
Congress has debated ideas about temporarily suspending the gas tax at times of high fuel prices or scrapping it altogether in favor of plans to tax drivers based on the number of miles they drive or their car’s weight like Bozzella’s proposal. But lawmakers have never voted to rescind the tax since they first authorized it in 1932.
This article originally appeared on USA TODAY: Push to ‘dump the gas tax’ grows, but is it any closer to reality?
Reporting by Keith Laing, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
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