If President Trump follows through on his proposal to abolish the federal gas tax, the federal government would lose more than $23 billion annually in revenue designated for highway and public transit programs. This figure represents the direct hit to infrastructure funding that Congress has relied on for decades to maintain roads, bridges, and transit systems across all 50 states. For context, $23 billion is roughly equivalent to the annual operating budget of the entire New York City transit system—money that currently flows into the Highway Trust Fund and gets distributed to states based on population and road mileage formulas.
Trump has indicated that suspending the gas tax is “something we have in our pocket if we think it’s necessary,” suggesting the proposal remains conditional rather than an immediate policy objective as of March 2026. The federal gas tax has been static since 1993, locked at 18.4 cents per gallon for gasoline and 24.4 cents for diesel. This three-decade freeze means the tax has lost significant purchasing power due to inflation—the same 18.4 cents that funded highway maintenance in 1993 covers far less construction and repair work today. Eliminating this tax entirely would represent an unprecedented reduction in dedicated transportation funding at the federal level, with ripple effects across state and local governments that depend on those federal allocations to match their own transportation budgets.
Table of Contents
- How Much Federal Gas Tax Revenue Is Currently Generated Each Year?
- What Happens to Infrastructure When Federal Highway Funding Disappears?
- Why Has the Federal Gas Tax Remained Frozen at 18.4 Cents Since 1993?
- What Would Happen to Pump Prices If the Gas Tax Was Abolished?
- Can Trump Actually Abolish the Federal Gas Tax Unilaterally Without Congress?
- Has the Federal Government Suspended or Reduced the Gas Tax Before?
- What’s the Long-Term Outlook for Federal Transportation Funding?
- Conclusion
How Much Federal Gas Tax Revenue Is Currently Generated Each Year?
The federal government collects approximately $23 billion annually from the gas tax—a figure that understates the true dependency because it doesn’t capture the full scope of fuel-related federal revenue. When looking at the broader Highway Trust Fund, federal fuel excise taxes raised approximately $40 billion in 2022 alone, according to the Bureau of Transportation Statistics. This $40 billion figure is the more comprehensive measure because it includes revenues from both gasoline and diesel fuel taxes, and it shows that federal motor fuel taxes represent about 91 percent of all revenues deposited into the Highway Trust Fund.
The remaining 9 percent comes from other miscellaneous sources, making the gas tax the bedrock of federal transportation funding. To understand what this money actually represents, consider that a typical state like Ohio receives roughly $3.2 billion annually from the federal highway program, which is funded almost entirely through these gas tax revenues. If the gas tax disappeared, Ohio would need to replace that funding through state taxes, tolls, or reduced construction—or some combination of all three. Larger states like California and Texas receive even more in absolute dollars, while smaller states like Wyoming still depend on federal gas tax revenue to maintain interstates that generate enormous economic activity relative to their population. The geographic redistribution effect is significant: states with high fuel consumption don’t necessarily receive proportional highway funding, creating a subsidy effect across state lines.
What Happens to Infrastructure When Federal Highway Funding Disappears?
Eliminating the $23 billion annual revenue stream would force a dramatic restructuring of how America’s 4.2 million miles of roads get funded and maintained. States would face immediate pressure to raise state gas taxes, implement tolls, or cut maintenance budgets. The limitation here is critical: most state legislatures are politically opposed to raising gas taxes themselves, as shown by decades of inaction at both state and federal levels. Wyoming hasn’t increased its state gas tax since 1993, the same year the federal rate froze.
If the federal tap closes without a replacement mechanism in place, rural states especially would struggle because they have fewer alternative revenue sources like urban tolls or congestion pricing. The real warning sign is what happened in past gas tax suspensions. During the 2008 financial crisis, Congress briefly suspended the gas tax, and the Highway Trust Fund experienced a funding gap that required general revenue transfers to fill the hole. Those transfers came from the overall federal budget, meaning money intended for other programs had to be diverted to prevent immediate road deterioration. A permanent abolition would require either constant general revenue transfers (which Congress would need to approve year after year) or a systematic defunding of transportation infrastructure. Neither option is politically simple, despite the appeal of the headline “no gas tax.”.
Why Has the Federal Gas Tax Remained Frozen at 18.4 Cents Since 1993?
The three-decade stagnation of the federal gas tax is a bipartisan political failure rooted in the unpopularity of raising taxes on drivers. In 1993, the Clinton administration did increase the gas tax by 4.3 cents as part of a deficit-reduction package, and the full rate settled at 18.4 cents for gasoline. Since then, every proposal to increase the rate has faced fierce opposition from motorist advocacy groups, trucking associations, and politicians unwilling to vote for a tax increase heading into an election cycle. The result is that inflation has eroded the purchasing power of the tax by roughly 50 percent in real terms—18.4 cents in 2026 dollars buys far less road repair than it did in 1993.
This political stalemate has created a chronic underfunding crisis in the Highway Trust Fund. The trust fund has required general revenue transfers from the Treasury approximately 20 times since 2008 to remain solvent. Rather than raising the gas tax to match inflation and road maintenance needs, Congress has repeatedly chosen to patch the fund with general taxpayer money. The Trump proposal to abolish the tax entirely takes this dynamic in the opposite direction: instead of fixing the underfunding, it accelerates it by eliminating the dedicated revenue source altogether.
What Would Happen to Pump Prices If the Gas Tax Was Abolished?
The theoretical maximum impact of eliminating the federal gas tax would be a reduction of 18.4 cents per gallon at the pump—a meaningful savings for drivers, especially in an inflationary environment. However, historical evidence suggests that consumers would not realize the full benefit. When gas taxes are suspended or reduced, petroleum companies and retailers typically capture a significant portion of the savings as profit rather than passing it directly to consumers.
During the Biden administration’s exploration of a gas tax suspension in 2022, energy analysts predicted that consumers would capture only 50 to 80 percent of the potential savings, with refiners and distributors retaining the rest. The practical tradeoff is unavoidable: even if consumers saved money at the pump in the short term, they would face higher state and local taxes elsewhere as states scrambled to replace lost federal funding. A driver in Pennsylvania might save 18.4 cents per gallon, but Pennsylvania would likely need to raise its state gas tax, property taxes, or tolls to replace the federal revenue loss. Across multiple states, the net effect for most households would be a wash or a wash in the negative direction once you account for service fees and administrative costs associated with new state-level funding mechanisms.
Can Trump Actually Abolish the Federal Gas Tax Unilaterally Without Congress?
The short answer is no. The president cannot suspend or abolish the federal gas tax through executive order. Federal motor fuel taxes are a statutory tax enacted by Congress under its constitutional authority to regulate interstate commerce and raise revenue. Any change to the tax rate, suspension, or elimination requires legislative action—a bill passed by both the House and Senate and signed by the president.
Trump has acknowledged this indirectly by framing the gas tax proposal as something “we have in our pocket if we think it’s necessary,” suggesting it’s a negotiating tool or future proposal rather than an immediate unilateral action. This constitutional limitation is crucial to understanding the real policy debate. The Trump administration could propose abolishing the gas tax and could prioritize that legislation if it controlled Congress, but it cannot simply order it done through the executive branch. Any abolition would require either Republican supermajorities in Congress willing to vote for it, or bipartisan support—both of which remain uncertain given that Democratic governors from large states would likely oppose the move due to the impact on their infrastructure budgets.
Has the Federal Government Suspended or Reduced the Gas Tax Before?
During the 2008 financial crisis, Congress passed a three-month gas tax holiday that suspended the 18.4 cent federal tax and the 2.86 cent Leaking Underground Storage Tank (LUST) tax. The economic impact of that suspension demonstrated why such measures remain rare: the savings were modest for drivers (estimates range from 1 to 3 cents per gallon actually captured at the pump), while the Highway Trust Fund immediately ran into a funding shortfall that required Congress to transfer approximately $8 billion in general revenue to keep construction projects operating. It was a clear lesson that short-term relief for drivers created significant complications for infrastructure planning, which requires predictable, stable funding.
The Biden administration considered a similar holiday in 2022 as gas prices spiked above $5 per gallon, but ultimately rejected it for the same reasons. Economists noted that the one-time suspension of a few months would provide minimal consumer relief while creating massive disruption to the funding of ongoing projects. A permanent abolition would simply extend this problem indefinitely, requiring either permanent general revenue transfers or a systematic reduction in road and transit construction across the country.
What’s the Long-Term Outlook for Federal Transportation Funding?
The federal gas tax is likely to face increasing pressure as vehicle fuel efficiency improves and electric vehicle adoption accelerates. By 2030, there will be significantly fewer gas-powered vehicles on the road, which means gas tax revenue will decline regardless of whether Congress raises the rate or maintains it. This structural challenge—declining revenue from a tax on a declining activity—is precisely why transportation funding experts have long recommended moving toward alternatives like vehicle miles traveled (VMT) fees or vehicle registration fees tied to emissions or value.
Trump’s proposal to abolish the gas tax entirely doesn’t address the long-term solvency question; it simply accelerates the funding crisis. If Congress wants to maintain current levels of federal transportation investment, it would need to enact a replacement funding mechanism. If Congress wants to reduce federal investment in infrastructure, then abolishing the gas tax is consistent with that goal, but it should be debated honestly as a reduction in public investment rather than framed as a consumer benefit that likely won’t materialize at the pump.
Conclusion
The federal gas tax generates approximately $23 billion annually for highway and transit programs, with a broader fuel tax revenue base of around $40 billion when diesel and other fuel excise taxes are included. These revenues fund critical infrastructure maintenance and construction across all 50 states. If Trump were to abolish the gas tax—a move that would require congressional action rather than unilateral executive authority—the federal government would lose this dedicated revenue stream and be forced to choose between replacing it with alternative funding mechanisms, transferring general revenue funds to the Highway Trust Fund, or allowing infrastructure investment to decline.
The proposal deserves serious scrutiny because the promised consumer benefit (up to 18.4 cents per gallon in savings) is unlikely to materialize fully at the pump, while the infrastructure consequences would be immediate and substantial. Before this proposal becomes policy, voters and policymakers should understand what it actually costs: not just in lost federal revenue, but in the local tax increases, reduced road maintenance, or delayed construction projects that would follow. The debate should be about infrastructure priorities and funding mechanisms, not about the false promise that eliminating a federal tax will significantly lower pump prices for American drivers.