INSIGHTi

Potential Impacts of a Federal Gasoline Tax
Moratorium
March 9, 2022
Even before the invasion of Ukraine by Russia, a major oil producer, the rise in the average nationwide
price at the pump for gasoline from its pandemic low had led to interest in legislation that would suspend
the 18.4 cents per-gallon federal gasoline tax through the end of 2022.
Two identical bills introduced in the 117th Congress, S. 3609 and H.R. 6787, would suspend the gasoline
tax through December 31, 2022, and transfer from the Treasury general fund amounts equal to any
revenues forgone to the Highway Trust Fund (HTF) and the Leaking Underground Storage Tank (LUST)
Trust Fund. Currently, 18.3 cents of the federal tax is dedicated to the HTF and 0.1 cent is dedicated to the
LUST fund. The bills would encourage the Secretary of the Treasury to ensure that the benefit of the tax
holiday is received by consumers. The bills would not suspend the tax on diesel fuel.
Recent Gasoline Price Trends and Components
According to the American Automobile Association (AAA), the national average price for a gallon of
regular gasoline was $4.173 on March 8, 2022. That was about $1.40 higher than one year earlier. The
current price exceeds the previous modern high of $4.114 per gallon in early July 2008, according to the
U.S. Energy Information Administration (EIA). All figures are unadjusted for inflation.
The EIA makes monthly estimates of the components of the retail price of gasoline. In January 2022, 56%
was attributable to crude oil, 14% was related to refining, and 16% was related to distribution and
marketing. Federal, state, and local taxes comprised 15% of the average retail price of gasoline, but with
considerable variation across the country. Total state taxes added 31.0 cents to the price of a gallon of
gasoline, on average, compared with the federal excise tax of 18.4 cents. At current price levels, the
federal tax comprises about 4.4% of the retail price.
Potential Effects on Retail Gasoline Prices
The federal gasoline tax is levied when gasoline is removed from a refinery or terminal, or when gasoline
is imported into the United States (26 U.S.C. §4081). Unlike a retail sales tax, the gas tax is not levied at
the time of a retail purchase at a gasoline station.
Congressional Research Service
https://crsreports.congress.gov
IN11879
CRS INSIGHT
Prepared for Members and
Committees of Congress

---

Congressional Research Service
2
Both bills would encourage the Secretary of the Treasury to “use all applicable authorities” to ensure that
the tax reduction is received by consumers. However, this provision may be difficult for the federal
government to enforce. Enforcement may require estimating what the price of gasoline in each locality
would have been in the absence of a federal gasoline tax suspension. Over an extended period of time,
other factors, such as changes in the prices of crude oil and other inputs, would be likely to affect the
hypothetical price of gasoline without a federal gasoline tax holiday. It is not clear what authorities
belonging to the Secretary of the Treasury are intended to be deployed under the bills to ensure that
consumers receive the benefit of the tax reduction.
A reduction in the gasoline price from a federal gasoline tax suspension could result in a greater volume
of gasoline sales. However, economic research suggests that quantity demanded may not significantly
change in response to a relatively small price decline. Modern estimates suggest that a 5% reduction in
price (similar to the effect of the proposed changes in S. 3609 and H.R. 6787) would be expected to
increase the quantity demanded by 1.35% to 1.85%.
Savings for households would depend upon how many gallons of gasoline a household purchases and the
extent to which the tax savings are passed through to consumers. Based on data from the Federal
Highway Administration, the average household, which owns slightly fewer than two light-duty vehicles,
would have saved roughly $163, or $13.58 per month, had no federal gasoline tax been reflected in the
price in 2020. However, gasoline consumption, and therefore gas tax payments, vary significantly by
vehicle size: the average vehicle with a wheelbase longer than 10 feet, such as most pickup trucks and
sport-utility vehicles (SUVs), was responsible for $115 in federal gasoline tax in 2020 ($9.58 per month),
while the amount paid for smaller vehicles averaged $71 ($5.92 per month). Savings also would vary by
geography. Households in suburban and rural areas are more likely to own a light vehicle than those in
cities, and drivers in rural areas drive farther each day, on average.
S. 3609 and H.R. 6787 would suspend only the federal gasoline tax. Owners of vehicles powered by
diesel fuel would generally not benefit. Most diesel fuel vehicles are likely to be commercial vehicles,
such as semitrailer trucks or delivery vehicles. Recent estimates suggest that 5% or less of new retail cars
and light trucks are powered by diesel fuel. However, residents of rural areas may be more likely to own a
diesel fuel-powered vehicle.
Surface Transportation Program Impacts
Highway and public transportation funding is linked to highway excise taxes, including the gasoline and
diesel taxes. These tax revenues are credited to the Highway Trust Fund (HTF). Beginning in September
2008, HTF revenues and balances have been insufficient to fund authorized spending and Congress has
repeatedly transferred money from the Treasury general fund to the HTF to make up the shortfalls. Under
the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), a transfer of $118 billion was made in
December 2021. Assuming a gasoline tax suspension is not extended and the gasoline tax is reduced to
zero on March 15, 2022, and reimposed on January 1, 2023, the excise tax revenue forgone would be
roughly $20 billion, based on Congressional Budget Office excise tax revenue projections. However,
because S. 3609 and H.R. 6787 would transfer from the general fund to the HTF amounts equal to the
excise tax revenue forgone, there should be no impact on the funding available under the IIJA for
highways and public transportation. It would decrease overall net revenues by about $15.7 billion after
accounting for the 21.6% offset due to increased payroll and income taxes.

---

Congressional Research Service
3
Author Information

Anthony A. Cilluffo
Robert S. Kirk
Analyst in Public Finance
Specialist in Transportation Policy





Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

IN11879 · VERSION 1 · NEW

---