Understanding Excise Taxes on Fuel and Energy in 2026

Excise taxes are a significant component of the price consumers pay for fuel and energy. These taxes are levied on the production or sale of specific goods, and governments utilize the revenue generated for various public services, most notably infrastructure development and education. As of March 18, 2026, understanding the current landscape of these taxes is crucial for both consumers and businesses.

Federal Excise Taxes on Air Transportation

The federal government imposes an excise tax on domestic air transportation. According to IRS Publication 510 (December 2025), this tax applies to each domestic segment of taxable air transportation (IRS No. 26). The specific tax rate is detailed within the publication.

Historical Context: Dutch Fuel Excise Duties (2022)

While not directly applicable to the current U.S. Situation, a recent example of excise duty adjustments occurred in the Netherlands in 2022. As reported by Meijburg, the Dutch Senate passed legislation to temporarily reduce excise duties on fuel by 21% and VAT on energy, effective April 1, 2022, in response to rising energy prices. This demonstrates a government’s ability to use excise taxes as a tool to influence consumer prices and address economic conditions.

State-Level Motor Fuels Taxes in Texas

Motor fuels taxes are a substantial revenue source for state governments. The Texas Comptroller of Public Accounts notes that in fiscal year 2015, motor fuels taxes generated over $3.4 billion in revenue for the state, making them the fourth-largest source of state tax revenue. These funds are primarily allocated to transportation projects and public education. Texas categorizes motor fuels into gasoline, diesel fuel, and liquefied gases, each with its own tax rate.

The History of the Federal Gas Tax

The federal government began collecting gas taxes to fund highway construction and maintenance. While the specific details of the initial implementation require further research, the long-standing practice highlights the critical role these taxes play in supporting transportation infrastructure.

Recent Changes and Expirations

It’s important to note that certain tax credits related to alternative fuels have recently expired. According to IRS Publication 510 (December 2025), credits for biodiesel, renewable diesel, agri-biodiesel, alternative fuels, alternative fuel mixtures, and sustainable aviation fuels (SAF) expired for fuels sold or used after December 31, 2024. Legislative action may be taken to extend these credits, but as of December 2025, they are not currently available.

Key Takeaways

• Excise taxes are levied on specific goods like fuel and air transportation.
• These taxes fund essential public services, including infrastructure and education.
• Tax rates and credits are subject to change based on legislative action.
• State-level taxes, like those in Texas, contribute significantly to state revenue.