Federal Gas Tax Suspension: Will It Lower Prices or Worsen the Highway Trust Fund Crisis?
With gas prices surging to an average of $4.50 per gallon—up 50% since the Iran war began in late February—President Donald Trump and Republican lawmakers are pushing to suspend the federal gas tax to provide temporary relief. But while the proposal could offer modest savings at the pump, experts warn it may not deliver meaningful help to consumers and could strain the already struggling Highway Trust Fund, which funds critical road and bridge maintenance.
Why Is the Federal Gas Tax Being Targeted?
The federal gas tax—currently 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel, according to the U.S. Energy Information Administration (EIA)—has become a political flashpoint as Americans face one of the sharpest increases in fuel costs in decades. The spike is directly tied to geopolitical tensions in the Middle East, which have disrupted global oil supplies and sent prices soaring.
Trump’s proposal, announced in Oval Office remarks on May 11, calls for a temporary suspension of the tax, a move that would require congressional approval. Republican lawmakers, including Sen. Josh Hawley (R-Mo.) and Rep. Anna Paulina Luna (R-Fla.), have already introduced legislation to suspend the tax for at least 90 days, framing it as immediate relief for struggling families ahead of the summer travel season.
How Much Relief Would Consumers Really See?
While suspending the federal gas tax would reduce the price at the pump, the actual savings for drivers would be far smaller than the headline figure. Here’s why:
- Retailer markups: Gas stations and distributors typically take a cut, leaving consumers with only about 10–12 cents per gallon in net savings, according to Mark Zandi, chief economist at Moody’s Analytics.
- State taxes vary widely: Consumers also pay additional state taxes, which range from 9 cents per gallon in Alaska to 71 cents in California, per the Tax Foundation. A federal suspension wouldn’t address these costs.
- Temporary effect: The relief would be short-lived, lasting only as long as the suspension. Once reinstated, prices could rebound quickly, especially if global oil markets remain volatile.
“This is a problem without an easy, short-run solution. The gas tax suspension would provide incredibly modest relief, but it’s really on the margin.”
The Hidden Cost: A Strained Highway Trust Fund
The federal gas tax isn’t just a revenue stream—it’s the primary funding source for the Highway Trust Fund, which finances road construction, bridge repairs, and public transportation projects. Suspending the tax would:
- Deplete the Trust Fund: The fund has already faced shortfalls for years, with lawmakers repeatedly patching it with general tax revenue. A suspension would accelerate this trend, risking delays in critical infrastructure projects.
- Shift costs elsewhere: Without gas tax revenue, states and the federal government would need to find alternative funding, potentially leading to higher taxes in other areas or reduced spending on roads.
- Create long-term risks: If the Trust Fund becomes insolvent, it could force Congress to raise taxes or cut spending on transportation, harming economic growth and job creation in sectors like construction.
Certified Financial Planner Stephen Kates warns that while the short-term consumer benefit is real, the trade-offs could be significant:
“A gas tax suspension would undoubtedly help consumers in the short term by immediately lowering prices at the pump. However, it would also negatively affect the tax revenue used for road repairs and other services funded by the gas tax.”
How This Proposal Compares to Past Efforts
This isn’t the first time lawmakers have considered suspending the gas tax. In March 2026, Sen. Mark Kelly (D-Ariz.) and Sen. Richard Blumenthal (D-Conn.) introduced a bipartisan bill to suspend the tax through October 1. However, the measure stalled in the Senate Finance Committee amid partisan divisions.
Several states have already acted independently, with Georgia, Indiana, Kentucky, and Utah reducing or suspending their own gas taxes in recent weeks. But without federal action, the relief remains patchy, leaving drivers in high-tax states—like California and New York—with little respite.
What Do Economists Say?
Experts agree that while a gas tax suspension could offer symbolic relief, it’s unlikely to solve the underlying issue: rising global oil prices. Here’s what leading voices have said:
- Adam Hoffer (Tax Foundation): “The fiscal costs are real. The Highway Trust Fund is already underwater, and this would make it worse without addressing the root cause of high gas prices.”
- Mark Zandi (Moody’s Analytics): “Consumers would take the modest savings, but it’s not a game-changer. The real solution lies in stabilizing oil markets and investing in alternative energy.”
- University of Michigan Survey of Consumers: Rising gas prices have drove consumer sentiment to a new low in May 2026, exacerbating financial strain on low- and middle-income households.
FAQ: Key Questions About the Gas Tax Suspension
- Could the gas tax suspension actually lower prices at the pump?
- Yes, but only slightly. The federal tax is just one part of the cost—retailers, distributors, and state taxes make up the rest. Expect savings of 10–12 cents per gallon at most.
- Would this help the economy?
- Possibly in the short term, as consumers would have slightly more disposable income. However, the long-term impact on infrastructure funding could offset these benefits.
- What’s the likelihood this passes Congress?
- Moderate. Republican lawmakers are unified behind the proposal, but Democrats may oppose it due to concerns about the Highway Trust Fund. A short-term suspension (e.g., 90 days) has a better chance than a long-term repeal.
- Are there better solutions to high gas prices?
- Experts suggest focusing on stabilizing oil markets, investing in public transit, and accelerating the transition to electric vehicles as more sustainable long-term fixes.
Bottom Line: A Band-Aid for a Bigger Problem
A federal gas tax suspension could provide minimal, temporary relief for drivers, but it won’t address the core issue: volatile global oil prices. More importantly, it risks weakening the Highway Trust Fund, which could lead to higher taxes or reduced infrastructure spending down the road.
For consumers, the proposal offers a political gesture rather than a substantive solution. For policymakers, it’s a short-term fix with long-term consequences. As the debate unfolds, one thing is clear: the real answer lies in broader energy policy, not just tax holidays.
What do you think? Would you support a gas tax suspension if it meant better roads later? Share your thoughts in the comments.