Trump wants to suspend the federal gas tax. How much would that help drivers?

The Trump administration’s proposal to temporarily suspend the federal gasoline tax in response to soaring fuel costs may offer only modest relief to U.S. drivers, according to tax and energy experts. As Americans face the highest gas prices since 2022, with the average gallon costing $4.52, the idea of lifting the gas tax has gained traction.

President Trump expressed support for the plan in an interview with CBS News, stating that the tax would be lifted for a period of time and phased back in when gas prices decrease. However, experts caution that the impact of suspending the gas tax would be limited, as recent price hikes have far exceeded the federal levy.

Currently, the federal government charges 18.4 cents per gallon on gas and 24.4 cents per gallon on diesel, with the revenue going towards the Highway Trust Fund. Suspending the tax would lower the price of regular gas to $4.34 per gallon and diesel to $5.39 per gallon, bringing prices back to early May levels.

Despite the proposed relief, the effectiveness of a gas tax suspension diminishes as prices continue to rise. Andrew Lautz, director of tax policy at the Bipartisan Policy Center, pointed out that for the average sedan, a federal gas tax holiday would only save around $2 per fill-up, compared to the $18-$25 increase in filling up since the start of the Iran war.

While the suspension of the federal gas tax would require approval from Congress, the proposal faces challenges due to the potential drain on the Highway Trust Fund. Analysts estimate that the government could lose about $2.1 billion in revenue each month if the tax is suspended.

Some states, such as Georgia, Indiana, and Utah, have already waived their local fuel taxes to provide more substantial relief to motorists. State fuel taxes range from 15 cents to around 60 cents per gallon, making state suspensions more impactful than a federal gas tax waiver.

Despite the potential benefits of a gas tax suspension, some state lawmakers have been hesitant to follow suit due to concerns about depleting funds needed for road maintenance. Indiana, in particular, has seen significant reductions in gas prices after waiving certain taxes, with prices dropping below $4 at some stations.

Overall, while the idea of temporarily lifting the federal gas tax may offer some relief to drivers, the impact is likely to be minimal in the face of skyrocketing fuel costs. State actions to waive local fuel taxes may provide more meaningful assistance to motorists struggling with high gas prices.