Suspending federal gas tax wouldn’t save drivers as much as they might hope – here’s what goes into the price of a gallon of gas

With gasoline prices still high – averaging over US$4.50 a gallon in mid-May 2026 – President Donald Trump said he wanted Congress to suspend the federal gas tax, which is 18.4 cents a gallon for gasoline and 24.3 cents a gallon for diesel. A bill has been introduced in the Senate, and one is expected to follow in the House, according to Politico, but their fate is unclear. States also charge their own taxes, ranging from 70.9 cents a gallon for gas in California to 8.95 cents in Alaska. Indiana, Georgia and Utah have suspended their gas taxes for at least some of 2026, and other states are considering similar measures. As an energy economist, I have seen how suspending those taxes does reduce prices, but not as much as politicians – or drivers – might hope. Research on past gas tax holidays has found that consumers get about 79% of the reduction in gas taxes. That means oil companies and fuel retailers keep about one-fifth of the tax cut for themselves rather than passing that savings to the public. Suspending the federal gas tax, which would require Congress to pass a law, wouldn’t help consumers much anyway. Even if…

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