Trump wants a gasoline tax suspension. But it’s never been done and could have serious drawbacks

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Before leaving for China today, President Trump was asked if he was concerned about how Americans feel paying higher prices due to the war in Iran. This is what he said. Every American President Trump saying Americans understand they have to pay higher prices while the war in Iran continues. Today’s inflation report, the Consumer Price Index, shows how much that war has. Impacted prices in the US. Overall inflation for all goods climbed sharply last month to 3.8% compared to the year before, the highest since 2025. While it’s hard to miss surging prices at the pump, economists also point out the hidden costs baked into the supply chain. Anything dependent on shipping and transportation, all greatly impacted by the. Struggle over the Strait of Hormuz. Rising diesel and jet fuel prices are adding to shipping costs and transportation budgets, trickling down into higher airfares and more expensive groceries, and experts say don’t expect costs to drop much even after the war ends. Unfortunately, consumers are going to have to just recognize that we will not be going back to the price level. The price that you pay for *** can of beans, for *** new phone, for *** new car. We will not be going back to what we had in January of 2025 or January of 2020. We’re just not going to go backwards. Today’s report also signals where borrowing costs are headed. Economists say with inflation running hot, the Federal Reserve is very unlikely going to cut back on interest rates this year, meaning your mortgage and credit card payments, for example, will also remain high.

With average nationwide gasoline prices above $4.50 a gallon, politicians are revisiting a perennial idea to ease high pump prices: suspending the federal gasoline tax.This story was originally published on PolitiFact.President Donald Trump said he wants to suspend the tax, which is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel.”It’s a small percentage, but it’s, you know, it’s still money,” Trump told reporters May 11.Gasoline prices have neared record highs since Trump started a war with Iran in February. Iran countered by blocking the Strait of Hormuz, normally the transit route for about one-fifth of the world’s crude oil.Then-President Joe Biden last suggested suspending the gasoline tax during the previous peak for gas prices in 2022, after Russia invaded Ukraine and western nations sanctioned Russian oil, reducing international supply. But such a hiatus, which would need congressional approval, has never been implemented, in part because of significant drawbacks, including shortchanging federal highway projects.Suspending the tax would threaten highway projectsA suspension would mean losing federal revenue designated for the Highway Trust Fund, which covers the costs of highway maintenance and expansion.Federal gasoline tax revenue is estimated at $30 billion annually through 2036, and diesel tax revenue is projected to bring in about $11 billion a year, according to the Committee for a Responsible Federal Budget, a group that tracks federal fiscal policy. At current spending rates, without a suspension, the nonpartisan Congressional Research Service projects the trust fund will run out of money by 2028. A suspension of the tax would accelerate that timeline. The Committee for a Responsible Federal Budget estimates that a one-month suspension of the gasoline and diesel taxes would deprive the government of $3.5 billion in revenue; a six-month suspension would total about $21 billion; and a three-year suspension would total $124 billion. Inflation has already undermined the spending power of the Highway Trust Fund over the past three decades. The gasoline tax hasn’t changed since 1993, and taking inflation into account, it has lost almost half its value since then, according to the Tax Foundation, a group that tracks tax policy.Some Republicans, including Sen. Josh Hawley of Missouri and Rep. Anna Paulina Luna of Florida, said they plan to introduce bills to suspend the taxes. On the Democratic side. Sens. Mark Kelly of Arizona and Richard Blumenthal of Connecticut, and Rep. Chris Pappas of New Hampshire, have also called for a suspension, but they propose offsetting the revenue losses with general funds, which would increase the federal deficit.Criticisms of suspending the gasoline taxBecause the federal gasoline tax is relatively modest, eliminating it would reduce current average gas prices to about $4.32 a gallon, still a historically high level. “For a 10-gallon fill-up, that’s $1.84 saved,” Clark Williams-Derry, an energy finance analyst with the Institute for Energy Economics and Financial Analysis, told PolitiFact in 2022. “That’s not nothing, but also not much of a dent in a family budget.”Patrick De Haan, head of petroleum analysis for the gasoline price tracker GasBuddy, estimates that it would take 13 months of a suspended federal gasoline tax for consumers to recoup the Iran war price increases that have accumulated to date.Critics also say that if you lower the price of gasoline, people are more likely to increase their driving. This could raise demand during a time of lower supply, which in turn could raise prices and limit consumers’ savings from the tax suspension.It’s also possible that instead of consumers reaping the savings from a tax suspension, the oil industry could benefit. Because the tax is collected at the refinery — before it gets to the consumer — there’s no guarantee that the oil company will pass the full benefits of a tax suspension on to consumers.What about the state gasoline taxes?Each state levies its own taxes on gasoline and diesel, and some also add sales taxes. In recent weeks, a few states, including Indiana and Georgia, have suspended their state gasoline and diesel taxes; others are considering it. Several states enacted suspensions in 2022.In many cases, the state taxes are larger than the federal tax. This means the benefits of a suspension to consumers would be bigger — but the drawbacks would be too.”A state-level gas tax holiday would have a larger effect on gas prices than a federal tax holiday almost everywhere,” Hugh Daigle, a University of Texas at Austin petroleum and geosystems engineering professor, told us in 2022.SourcesCongressional Research Service, “Funding and Financing Highways and Public Transportation Under the Infrastructure Investment and Jobs Act,” April 14, 2026Congressional Research Service, “The Highway Trust Fund’s Highway Account,” June 3, 2025Federation of Tax Administrators, “State Motor Fuel Tax Rates,” 2025Committee for a Responsible Federal Budget, “A Gas Tax Holiday Would Cost Billions Each Month,” March 17, 2026Tax Foundation, “Federal Gas Tax Holiday? Suspending the Gas Tax Is a Mistake,” Feb. 22, 2022Tax Foundation, “Who Will Pay for the Roads?” Aug. 25, 2020Urban Institute-Brookings Institution Tax Policy Center, “A Federal Gas Tax Holiday Is A Terrible Idea,” June 22, 2022Patrick De Haan, X post, May 11, 2026American Automobile Association, national gasoline price average, accessed May 12, 2026Associated Press, “Trump says he’ll suspend the federal tax on gas. What does that mean?” May 11, 2026Politico, “Gas tax holiday momentum grows with Trump support,” May 11, 2026Washington Post, “Trump seeks to pause federal gas tax as prices soar amid Iran conflict,” May 11, 2026PolitiFact, “The pros and cons of a gas tax holiday,” June 23, 2022PolitiFact, “Trump is wrong: Gas prices have reached near record highs, not ‘come down very substantially,’” May 8, 2026Email interview with Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, May 11, 2026

With average nationwide gasoline prices above $4.50 a gallon, politicians are revisiting a perennial idea to ease high pump prices: suspending the federal gasoline tax.

This story was originally published on PolitiFact.

President Donald Trump said he wants to suspend the tax, which is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel.

“It’s a small percentage, but it’s, you know, it’s still money,” Trump told reporters May 11.

Gasoline prices have neared record highs since Trump started a war with Iran in February. Iran countered by blocking the Strait of Hormuz, normally the transit route for about one-fifth of the world’s crude oil.

Then-President Joe Biden last suggested suspending the gasoline tax during the previous peak for gas prices in 2022, after Russia invaded Ukraine and western nations sanctioned Russian oil, reducing international supply.

But such a hiatus, which would need congressional approval, has never been implemented, in part because of significant drawbacks, including shortchanging federal highway projects.

Suspending the tax would threaten highway projects

A suspension would mean losing federal revenue designated for the Highway Trust Fund, which covers the costs of highway maintenance and expansion.

Federal gasoline tax revenue is estimated at $30 billion annually through 2036, and diesel tax revenue is projected to bring in about $11 billion a year, according to the Committee for a Responsible Federal Budget, a group that tracks federal fiscal policy.

At current spending rates, without a suspension, the nonpartisan Congressional Research Service projects the trust fund will run out of money by 2028. A suspension of the tax would accelerate that timeline.

The Committee for a Responsible Federal Budget estimates that a one-month suspension of the gasoline and diesel taxes would deprive the government of $3.5 billion in revenue; a six-month suspension would total about $21 billion; and a three-year suspension would total $124 billion.

Inflation has already undermined the spending power of the Highway Trust Fund over the past three decades. The gasoline tax hasn’t changed since 1993, and taking inflation into account, it has lost almost half its value since then, according to the Tax Foundation, a group that tracks tax policy.

Some Republicans, including Sen. Josh Hawley of Missouri and Rep. Anna Paulina Luna of Florida, said they plan to introduce bills to suspend the taxes. On the Democratic side. Sens. Mark Kelly of Arizona and Richard Blumenthal of Connecticut, and Rep. Chris Pappas of New Hampshire, have also called for a suspension, but they propose offsetting the revenue losses with general funds, which would increase the federal deficit.

Criticisms of suspending the gasoline tax

Because the federal gasoline tax is relatively modest, eliminating it would reduce current average gas prices to about $4.32 a gallon, still a historically high level.

“For a 10-gallon fill-up, that’s $1.84 saved,” Clark Williams-Derry, an energy finance analyst with the Institute for Energy Economics and Financial Analysis, told PolitiFact in 2022. “That’s not nothing, but also not much of a dent in a family budget.”

Patrick De Haan, head of petroleum analysis for the gasoline price tracker GasBuddy, estimates that it would take 13 months of a suspended federal gasoline tax for consumers to recoup the Iran war price increases that have accumulated to date.

Critics also say that if you lower the price of gasoline, people are more likely to increase their driving. This could raise demand during a time of lower supply, which in turn could raise prices and limit consumers’ savings from the tax suspension.

It’s also possible that instead of consumers reaping the savings from a tax suspension, the oil industry could benefit. Because the tax is collected at the refinery — before it gets to the consumer — there’s no guarantee that the oil company will pass the full benefits of a tax suspension on to consumers.

What about the state gasoline taxes?

Each state levies its own taxes on gasoline and diesel, and some also add sales taxes. In recent weeks, a few states, including Indiana and Georgia, have suspended their state gasoline and diesel taxes; others are considering it. Several states enacted suspensions in 2022.

In many cases, the state taxes are larger than the federal tax. This means the benefits of a suspension to consumers would be bigger — but the drawbacks would be too.

“A state-level gas tax holiday would have a larger effect on gas prices than a federal tax holiday almost everywhere,” Hugh Daigle, a University of Texas at Austin petroleum and geosystems engineering professor, told us in 2022.