Suspending the federal gasoline tax could bring prices down significantly. But experts say the measure may not provide meaningful relief to consumers and could deplete key federal funds for highway construction and maintenance.
On Monday, President Donald Trump said in an interview with CBS News that he wanted to suspend taxes “for a period of time,” before saying in remarks from the Oval Office that he would “cut” them.
According to the U.S. Energy Information Administration, taxes and other charges on retail gasoline and diesel fuel are 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel.
Reducing or suspending the federal gas tax would require Congressional approval, but several Republican lawmakers quickly moved forward with the proposal after President Trump’s comments.
In response to President Trump’s comments, Sen. Josh Hawley (R-Missouri) introduced a bill that would suspend the federal gas tax on gasoline and diesel fuel for at least 90 days if enacted.
“American workers and families deserve immediate relief, and this bill will do just that,” Hawley said in a statement.
Republican Rep. Anna Paulina Luna of Florida also said in an X post on the same day that she plans to introduce a House bill this week that would suspend the federal gas tax.
Shortly after the Iran war began, Sens. Mark Kelly, D-Ariz., and Richard Blumenthal, D-Conn., introduced legislation in March that would suspend the federal gas tax until Oct. 1, but the bill has not passed the Senate Finance Committee.
April 30, 2026 Gas prices over $6 per gallon are showing at Chevron and Shell stations in Monterey Park, California.
Frederick J. Brown | AFP | Getty Images
The proposal comes as Americans prepare for the busy summer travel season. According to the U.S. Energy Information Administration, retail gasoline prices typically rise in the spring and peak in late summer when demand soars.
But some policy experts say suspending the federal gas tax may only provide modest relief and could pose long-term fiscal challenges.
“This is a problem with no easy, short-term solution,” said Adam Hoffer, director of excise policy at the Tax Foundation.
The White House and Sen. Hawley’s office did not respond to CNBC’s requests for comment.
What is the federal gasoline tax?
Under current law, consumers pay 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel in federal taxes and other fees.
State taxes are collected in addition to federal taxes, and their rates range from about 9 cents per gallon in Alaska to about 71 cents in California, according to the Tax Foundation. As of May 12, several states have taken steps to reduce their state gas taxes, including Georgia, Indiana, Kentucky, and Utah.
Moody’s chief economist Mark Zandi said suspending the federal gas tax for a period of time could provide “very modest relief” to consumers.
“That’s 18 cents, but once retailers and distributors take their share, it could be closer to 10 to 12 cents,” he said.
“Americans will accept it, but it’s really marginal,” Zandi said. “I think it’s a welcome relief, but it’s very modest and temporary.”
Gasoline prices have increased by 50% since the war with Iran began on February 28th. As of Tuesday, the national average for a gallon of gas is $4.50, according to AAA.
Other data shows that the sudden spike in oil prices and products made from petroleum, such as gasoline, has rippled through the economy, straining household budgets and hitting low-income households especially hard.
Consumer sentiment fell to a new low in May as gasoline prices soared due to the Iran war, according to a closely monitored consumer survey by the University of Michigan.
“The fiscal costs are real.”
The federal gas tax also funds highway construction and maintenance.
“While this is a relatively small relief, the fiscal costs are real,” said Hoffer of the Tax Foundation.
Although the federal gas tax brings in billions of dollars a year, the Highway Trust Fund is having an increasingly difficult time covering the increasing costs of federal infrastructure projects, he said.
“That fund is essentially underwater in terms of being able to fund all of its own projects,” Hoffer said.
The benefits for consumers could be offset by the risks to these important services, said Stephen Kates, a financial analyst and certified financial planner at Bankrate.
Suspending the gas tax “will definitely help consumers in the short term by immediately lowering prices,” Cates said. “But it would also have a negative impact on tax revenue used for road repairs and other services funded by gas taxes.”
