Expert shares insight on a potential federal gas tax pause

Added: 2026-05-13

[00:00:01]About eight in 10 Texas voters say they are concerned about the price of gas.

[00:00:06]That is according to the latest poll from the Texas Politics Project and UT.

[00:00:11]Providing relief to drivers is perhaps why President Trump floated the idea this week of suspending the federal gas tax. That is something even the Texas Democratic Senate candidate, James Talarico, has also called for recently to happen.

[00:00:27]This afternoon, we want to dig a little bit more into that particular idea with Andrew Lautz. He is the director of tax policy for a non-profit think tank called Bipartisan Policy Center. Andrew, welcome to our show and thanks for talking to us today.

[00:00:41]Thanks so much for having me on. Let's begin by discussing the cost. So, how much are we paying in federal gas tax when we go to fill up at the pump?

[00:00:52]Sure. So, the federal gas tax is just over 18 cents per gallon. And of course, just about every state has their own gas tax rates on top of that, but the federal rate, 18 cents per gallon, and then for diesel, it's 24 cents per gallon. Yeah, there have been a few ideas floating here in the state even to call for the governor to lift the state gas tax, but let's just focus on the federal one today.

[00:01:14]If there is indeed a federal gas tax holiday enacted, how much relief do you think that would provide to someone who's filling up their tank?

[00:01:23]Sure. So, an important caveat here, and and one that maybe will be surprising to some of your viewers is is the research shows the full gas tax suspension does not go through to drivers at the pump.

[00:01:34]So, it's not like we have an 18 cent per gallon federal gas tax suspension and prices immediately drop 18 cents per gallon. It's more like 60 to 80% of that suspension passes through to drivers at the pump. And so, we're expecting anywhere from 10 to 15 cents per gallon of relief for a full fill-up of a sedan, we're talking about, you know, two to three dollars of savings for an SUV, maybe three to five dollars of savings per full fill-up of the tank. I had noticed a few of your tweets about this particular idea, so I'm hoping you can talk about what it would actually take to suspend the federal gas tax.

[00:02:10]So, it would require an act of Congress.

[00:02:13]Uh you know, there's um I guess there's been some conversation or some question over whether the president can do this himself. Uh it is our understanding that suspending the federal gas tax requires an act of Congress, and then like most things in Congress, it's probably going to require bipartisan support. Now, as you noted, uh there is bipartisan support uh for this idea right now in Congress. Obviously, we'll have to see if it actually goes through in the coming weeks and months. Yeah, another thing to watch in Washington right now.

[00:02:39]Um Andrew, where does revenue collected from the federal gas tax go exactly? And if that tax is lifted for any amount of time, how much would that impact?

[00:02:50]So, this is uh one of the most unique things about the federal gas tax. Unlike most federal taxes that we pay, which usually just go into a general fund, the federal gas tax actually goes to the Highway Trust Fund. Uh and and the Highway Trust Fund is dedicated to federal spending on interstate highways, on road, bridge uh repair, and maintenance, on uh uh transit systems around the country. And so, you know, while a a one- or two-month or three-month suspension of the federal gas tax may not cause serious and long-term financing issues uh for that federal highway spending, uh we are concerned that a that a a longer-term suspension uh might have a uh serious impact uh in the middle and long-term on the ability of our country, of our federal government, to help finance some of the uh sorely needed infrastructure projects around the country. And a lot of our viewers at home may be seeing some of these stories about this idea getting floated out there, as we've been talking about. But, when did the US last enact a gas tax holiday? What were the circumstances surrounding that?

[00:03:51]Uh so, the US never enacted a federal gas tax holiday before. Various states have implemented gas tax holidays including a few states this time around given the run-up in gas prices several states back in 2022 when Russia first invaded Ukraine but this has never happened on the federal level before. So if Congress does act in the weeks ahead it will be truly an unprecedented move at least for the federal gas tax. A move perhaps to the first of its kind for our history but Andrew we appreciate you taking the time this afternoon and giving us some more insight about this. I think this helps shed a little bit more light for our viewers out there. So thanks again for doing this today.

[00:04:29]Thanks so much. Have a great day. All right.