President Donald Trump announced his intention to suspend the federal gas tax of 18 cents per gallon in response to surging gas prices, which have risen more than 50% nationwide since the start of the Iran war at the end of February [1]. The national average for gas prices is approaching $5 per gallon, and an NBC News analysis indicates that even if all state and federal gas taxes were suspended, prices would still be 35% higher per gallon than before the Iran war began [1].
Currently, an average of 51 cents in taxes and fees are added to every gallon of regular gas in the U.S., with 18 cents going to the federal government and the remainder to states. The proportion of taxes and fees in the total price per gallon varies by state, from 5% in Alaska to 17% in Illinois, with a national average of 11.5% [1]. The actual amount ranges from 27 cents per gallon in Alaska to 89 cents per gallon in California, excluding local taxes [1].
Georgia suspended its state gas tax in March, and this suspension is set to expire on May 19 [1]. Democrats in both the House and Senate proposed suspending the federal gas tax in March as well. Energy Secretary Chris Wright stated, “All measures that can be taken to lower the price at the pump and lower the prices for Americans, this administration is in support of,” during an appearance on NBC News’ “Meet the Press” [1].
The federal gas tax, which has not been increased since 1993, funds the Highway Trust Fund for highway and mass transit projects. An estimate cited in the article suggests that a federal gas tax holiday would cost at least $2.5 billion per month in lost revenue [1].
CONCLUSION
President Trump's proposal to suspend the federal gas tax is a direct response to the sharp rise in gas prices following the Iran war. While the suspension could provide some relief, analyses show it would not fully offset the price increases, and it would come at a significant cost to federal infrastructure funding. The market impact is high, as the policy debate continues and consumers face elevated fuel costs.