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Trump’s Federal Gas Tax Holiday Plan: How Much Is Gas Tax and Will It Lower Prices?
Americans could soon see temporary relief at the pump after President Donald Trump backed a plan to suspend the federal gasoline tax amid soaring fuel prices linked to the Iran conflict. Speaking to ThePress Nigeria, Trump said he supports temporarily lifting the tax as gas prices continue climbing nationwide.
“I think it’s a great idea,” Trump said Monday. “Yup, we’re going to take off the gas tax for a period of time, and when gas goes down, we’ll let it phase back in.”
The proposal comes as Americans face the highest gas prices since 2022. According to AAA, the national average price for a gallon of gasoline hit $4.52 on Monday, rising roughly $1.54 since the US and Israel attacked Iran in late February.
The federal government currently charges 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel. Revenue from those taxes supports the Highway Trust Fund, which helps pay for roads and transportation infrastructure across the country.
How Much Could Drivers Actually Save?
Experts say suspending the federal gas tax would provide only modest savings because fuel prices have increased far more than the tax itself.
If the tax were paused, the average price of regular gasoline would fall from about $4.52 per gallon to roughly $4.34 per gallon. Diesel prices would drop to around $5.39 per gallon.
Andrew Lautz, director of tax policy at the Bipartisan Policy Center, said the benefits may be smaller than many drivers expect.
“The irony of a gas tax suspension is that the higher prices go, the less of an impact it has,” Lautz wrote in a social media post.
“For a sedan at national average prices, filling up your car costs $18-$25 more than it did before the war. A federal gas tax holiday saves you up to $2 per fill-up,” he added.
Lautz also created a calculator estimating savings for consumers. Under the proposal, a California SUV driver could save between $2.36 and $3.09 per tank, though that same driver would still be paying roughly $24 to $32 more per fill-up compared to prices before the Iran war began.
The proposal would still require approval from Congress because the fuel tax is established under federal law. With Washington deeply divided politically and Midterm elections approaching, experts say passage could be difficult.
There are also concerns about the financial impact on transportation funding. GasBuddy analyst Patrick De Haan estimated that suspending the federal gas tax would cost the government about $2.1 billion per month in lost revenue for the Highway Trust Fund.
Some states, however, have already moved ahead with their own fuel tax relief measures. Georgia, Indiana, and Utah have waived local fuel taxes in recent months. Experts say state-level suspensions can sometimes provide more meaningful savings because state gas taxes often range from 15 cents to nearly 60 cents per gallon.
