Ending the state gas tax could lower prices at the pump. But the move may not provide meaningful relief to consumers, experts say, and could drain valuable state funds for highway construction and maintenance.
On Monday, President Donald Trump said in the Oval Office that he would “reduce” the tax, after saying in an interview with CBS News that he wanted to freeze it “for a while.”
Taxes and other fees for retail gasoline and diesel are 18.4 cents per liter and 24.4 cents per gallon for diesel, according to the US Energy Information Administration.
Lowering or temporarily suspending the federal gas tax would require congressional approval, but several Republican lawmakers quickly rushed proposals to do just that after Trump’s remarks.
Following Trump’s comments, Sen. Josh Hawley, R-Mo., has introduced legislation that would suspend the federal gas tax on gasoline and diesel for at least 90 days if enacted.
“American workers and families deserve immediate relief and this legislation will do just that,” Hawley said in a statement.
In the X post on the same day, Rep. Anna Paulina Luna, R-Fla., also said she plans to introduce a House bill this week to end the state gas tax.
In March, shortly after the start of the Iran war, Feb. 28, Sens. Mark Kelly, D-Ariz., and Richard Blumenthal, D-Conn., unveiled legislation to temporarily suspend the federal gas tax on Oct. 1. But that bill has not cleared the Senate Finance Committee.
Gasoline prices above $6 per gallon are displayed at Chevron and Shell stations in Monterey Park, California, on April 30, 2026.
Frederick J. Brown | Afp | Getty Images
The proposals come as Americans prepare for the busy summer travel season. Typically, gasoline prices rise in the spring and peak in late summer as demand increases, according to the US Energy Information Administration.
But freezing the federal gas tax would only provide relief at the pump while creating long-term fiscal challenges, some policy experts say.
“This is a problem that doesn’t have an easy, short-term solution,” said Adam Hoffer, director of tax policy for the Tax Foundation, a nonpartisan think tank.
The White House and Hawley’s office did not respond to CNBC’s requests for comment.
What is the state gas tax?
In addition to federal gas taxes, consumers pay a state gas tax that varies from about 9 cents per gallon in Alaska to about 71 cents per gallon in California, according to the Tax Foundation. As of May 12, several states — including Georgia, Indiana, Kentucky and Utah — have taken steps to provide state gas tax relief.
Suspending the state gas tax only for a period of time may provide consumers with “very little relief,” said Mark Zandi, an economist at Moody’s.
“It’s 18 cents, and after the dealers and distributors are done, it could be closer to 10 to 12 cents,” he said.
“The Americans could take it, but it’s actually on the edge,” Zandi said. “I think it would be a welcome relief, but very modest and temporary.”
The price of gas has increased by 50% since the start of the Iran war. The national average for a gallon of gas is $4.50 as of Tuesday, according to AAA.
A sudden increase in the price of oil and refined oil products, such as gasoline, rippled through the economy and strained household budgets, hitting low-income families especially hard, some data shows.
Rising gasoline prices due to the Iran war caused consumer sentiment to drop sharply in May, according to the University of Michigan’s closely monitored Survey of Consumers.
‘The financial costs are real’
Federal gas taxes also pay for highway construction and maintenance.
“This is relatively small relief, but the financial costs are real,” said Hoffer with the Tax Foundation.
Although the state’s gas tax brings in billions of dollars a year, the Highway Trust Fund has struggled to cover the rising costs of federal infrastructure projects, he said.
“That fund is underwater when it comes to being able to pay for all of its programs,” Hoffer said.
Any consumer benefit may be offset by the risk of these essential services, according to Certified Financial Planner Stephen Kates, a financial analyst at Bankrate.
The gas tax freeze “will undoubtedly help consumers in the short term by immediately lowering prices at the pump,” Kates said. “However, that would also have a negative impact on the tax dollars used for road maintenance and other services funded by the gas tax.”
