Gas tax holiday gains traction as gas prices top $4.50 nationwide

An 18.4-cent federal gas-tax holiday would shave only a sliver off pump prices at a time when the national average for regular gasoline stood at $4.522 a gallon and had just surged 25 cents for a second straight week to $4.55. That means the tax cut amounts to roughly 4 cents on every dollar of gas bought, or about $1.84 in savings for every 10 gallons pumped, hardly the kind of relief that matches the political rhetoric around it.

The Trump administration signaled it was open to the idea. Energy Secretary Chris Wright said on NBC News’ Meet the Press that the White House was “open to all ideas” to lower gas prices, including suspending the federal gas tax, as worries over the Iran conflict and near-$4.50 fuel prices intensified. The proposal has also resurfaced in Congress, where Sen. Mark Kelly of Arizona, Sen. Richard Blumenthal of Connecticut and Rep. Chris Pappas of New Hampshire introduced the Gas Prices Relief Act of 2026 in March. Their bill would suspend the 18.4-cent federal gasoline excise tax through Oct. 1, 2026.

The math, though, cuts against the idea that a tax holiday would deliver dramatic relief. Even if the full 18.4-cent cut reached drivers at the pump, it would barely dent a price already above $4.50 nationwide. In practice, analysts have long warned that gas-tax holidays do not always pass through cleanly to consumers, because refiners, distributors and stations can absorb part of the benefit rather than cutting prices dollar for dollar. That makes the policy as much a messaging exercise as a direct household savings plan.

The fiscal tradeoff is also significant. The federal gasoline tax and the 24.4-cent diesel tax feed the Highway Trust Fund, which has relied on general-fund transfers for more than two decades. The Congressional Budget Office has projected that balances in the trust fund’s highway and transit accounts could be exhausted in 2028, underscoring how little slack remains in the system. Suspending the tax would deepen that strain unless Congress replaced the lost revenue with another funding source.

States have already tried versions of the same idea. New York suspended several state fuel taxes in 2022 through the end of that year, and Georgia paused collection of its state motor fuel excise tax in 2022 before extending the break through the summer. Those experiments delivered political cover, but they also exposed the core problem of gas-tax holidays: they are easy to announce, hard to target and often too small to matter much when crude, refining margins and geopolitics are still doing the heavy lifting at the pump.