Federal gas tax holiday: crunching the numbers

Added: 2026-05-16

[00:00:00]Multiple factors determine the price you pay for a regular gallon of gas. The US Energy Information Administration says about 51% varies with the price of crude oil. 20% is refining costs, 11% distribution and marketing, and 18% is taxes, not just federal, but state and local, too. Each gallon of regular gas carries an 18.4 cent federal tax. Each gallon of diesel, 24.4 cents. As gas prices soar due to the ongoing war in Iran, President Donald Trump this week floated temporarily scrapping those taxes. These are essentially line items that that stations are paying at the retail level, meaning that it could be a relatively quick pass-through once this tax is suspended, if that does happen. A Penn Wharton analysis found suppliers likely wouldn't pass along all of the savings from a federal gas tax holiday to consumers, and gas prices would only drop an average of 13.2 cents per gallon. So, a household filling a 15-gallon tank once a week between June 1st and October 1st would save a total of about $35.

[00:01:01]That federal gas tax also funds the Highway Trust Fund, which helps to build and maintain the nation's highways, bridges, and mass transit, and is already running at a deficit.