Trump wants to pause the federal gas tax. Here’s how much you could save at the pump.
Trump’s comments on the suspension of the gas tax come amid an ongoing stalemate between the U.S. and Iran over the Strait of Hormuz.
Amid soaring gas prices in the U.S. due to the Iran war, President Donald Trump on Monday said he supports congressional action to suspend the federal gas tax, a move experts say would be more of a Band-Aid for drivers than a long-term solution to high prices.
“A gas tax holiday would give consumers some momentary relief,” said Christopher Bosso, professor of public policy and political science at Northeastern.
The price of gas has climbed about $1.50 per gallon since the Iran war escalated in late February.
The federal gas tax currently adds 18.4 cents per gallon to gasoline and 24.4 cents per gallon to diesel fuel purchased in the United States. Proceeds from the gasoline tax go directly into the transportation fund, or the Highway Trust Fund, to finance federal transportation programs, including mass transit, Bosso said.
Trump’s comments on the suspension of the gas tax come amid an ongoing stalemate between the U.S. and Iran over disruptions in the Strait of Hormuz, a critical global oil chokepoint, and the broader war that began in late February.
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Iran has been able to reduce the flow of commercial shipping traffic through the Strait of Hormuz, which has pushed the price of Brent crude above $100 per barrel amid fears of a prolonged global supply shock.
Drivers across the U.S. are paying substantially more at the pump than they were a year ago. The American Automobile Association reports the current national average price for a gallon of regular gas stands at $4.52, up from $3.14 at the same time last year. On Feb. 28, when the U.S. and Israel launched attacks on Iran, the price of gas was $2.98 a gallon, according to AAA.
What effect would the suspension of the federal gas tax actually have on consumers?
At these prices, if the savings are fully passed on to drivers, they could see about a 4% reduction in their gas bill, according to Robert K. Triest, professor of economics.
“Research suggests that the tax is mostly passed on to consumers, but that might differ somewhat in the short run when supply is less price elastic than it is in the long run,” Triest said.
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The federal gas tax has never been suspended since it was created in 1932, despite proposals during the 2008 election amid sky-high prices then, and again in 2022, when soaring inflation and rising fuel prices prompted calls for short-term relief at the pump.
The case for suspending the tax is always political in nature, given the relatively modest and temporary relief, Triest said. Because gas prices are largely driven by global oil markets, suspending the tax doesn’t often move the needle for consumers at the pump, and instead allows oil companies to retain more of the savings as profit, some analysts argue.
“Any tax ‘holiday’ essentially takes money from future transportation project funding,” Bosso said, adding that money is used to fund highway maintenance, bridge repairs and other transportation infrastructure projects.
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“While any suspension has fiscal implications for transportation projects, critics would see it as symbolic,” Bosso said. He noted the suspension would do little to curb oil company profits, which tend to increase when gasoline prices rise for consumers.
To rein in the oil company profits, “you also would need to impose a ‘windfall profits tax’ like they did in the 1970s,” he said, referring to a one-time tax or surcharge levied on excess corporate earnings during periods of rising energy prices and market turbulence, usually a result of geopolitical instability.
States also impose their own gas taxes on top of the federal levy. The rates vary significantly. California, for example, has the nation’s highest state gas tax at roughly 71 cents per gallon, followed by Illinois and Washington, while Alaska has the lowest at about 9 cents per gallon, according to data from the U.S. Energy Information Administration.
“There will be little direct impact on states, with possible future effects if federal transportation funding for state projects is reduced due to lower trust fund inflows,” Triest said. “But states might face political pressure to reduce their own gas taxes.”
Sen. Josh Hawley, of Missouri, on Monday announced on social media that he is introducing legislation to suspend the federal tax, as the holiday would require congressional approval. Sens. Mark Kelly and Richard Blumenthal introduced a separate bill, the Gas Prices Relief Act of 2026, that would temporarily suspend the federal gasoline tax through Oct. 1.
