Would a federal gas tax holiday really lower pump prices? What experts are saying

Added: 2026-05-23

[00:00:00]Gas prices are rising [music] again and President Trump is now floating a temporary suspension of the federal gas tax as way to give drivers some relief.

[00:00:08]Let's go to Morgan Stevens with the fact check team. So, got to talk about the numbers. Let's start with the federal gas tax. I believe it's just short of 20 cents per gallon, right?

[00:00:17]>> Yeah, the federal gas tax is 18.4 cents per gallon for regular and 24.4 cents for diesel. That tax has been in place at the same rate since 1993 and it helps pay for highways, bridges, and other transportation projects through the Federal Highway Trust Fund. Now, President Trump says he supports a temporary gas tax holiday as prices climb following the Iran war, but Congress would have to approve any suspension. The Congressional Research Service also notes there's no guarantee oil companies, refineries, or gas stations would pass the full federal tax savings along to you, the consumer. But, you would think whether or not you see relief it has to do with location because I mean, what about the state gas tax?

[00:01:02]>> Yeah, absolutely. So, experts say drivers would probably see a little bit of relief, but not necessarily the full 18 cents per gallon. And even if that federal gas tax is suspended, Americans would still have to pay their state gas taxes, which can often be much higher depending on where you live. According to the Tax Foundation, California has the highest state gas taxes in the country at a staggering 70 cents per gallon, while states like Pennsylvania, Washington, and Illinois trailed just behind that. Analysts also say the biggest factor in gas prices it's still the global price of oil. So, even if the federal tax is paused, volatile oil markets from the Strait of Hormuz being closed off could quickly erase any of those short-term savings at the pump.

[00:01:49]And to your point, everywhere you go, uh gas prices are reaching historic highs ahead of the holiday weekend. All right, Morgan, thank you. For more on this fact check team topic, Amna Nawaz will join us to dig into how many states have suspended the gas tax before and if oil companies could absorb the savings.