The federal excise tax on gasoline is 18.4 cents per gallon for regular gasoline and 24.4 cents per gallon for diesel fuel. This rate has remained unchanged since October 1, 1993—over three decades without a single increase. When President Trump claims that gas taxes are at record highs, he is not referring to the federal tax rate itself, which is fixed at the same level it was during the Clinton administration.
Rather, he is pointing to the combined burden of state and federal taxes, which in high-tax states like California can reach approximately 70-90 cents per gallon when combined, plus the impact of volatile crude oil prices that have driven the total pump price to around $4.00 per gallon as of March 2026. The confusion around Trump’s statement reflects a critical distinction in energy policy: the federal gas tax is not responsive to inflation or economic conditions, while state taxes, crude oil costs, and refining margins are highly volatile. Drivers in March 2026 are paying historically high prices at the pump, but the federal government’s contribution to that cost has remained stagnant for 33 years. This frozen rate means that the federal tax’s purchasing power has deteriorated by approximately 113 to 122 percent through 2025, effectively reducing what the government collects for highway infrastructure despite rising construction and maintenance costs.
Table of Contents
- What Is the Federal Gas Tax Rate and When Was It Last Increased?
- Why Has the Federal Gas Tax Lost Purchasing Power Since 1993?
- How Do State Gas Taxes Affect the Total Tax Burden at the Pump?
- What Is Actually Driving the Current High Gas Prices in 2026?
- Is Trump Proposing to Suspend the Federal Gas Tax?
- How Have Federal Gas Taxes Compared Across Different U.S. Administrations?
- What Does the Future Hold for Federal Gas Tax Policy and Highway Funding?
- Conclusion
What Is the Federal Gas Tax Rate and When Was It Last Increased?
The current federal excise tax on gasoline is 18.4 cents per gallon, established by legislation signed by President Bill Clinton and taking effect on December 1, 1993. Diesel fuel carries a higher federal tax of 24.4 cents per gallon, also set in 1993. These rates appear on every gallon sold in the United States, collected by fuel distributors and remitted to the federal Highway Trust Fund, which finances road construction, bridge maintenance, and transit projects nationwide. Despite three decades of inflation, economic growth, and significant changes to energy markets, Congress has never increased these rates since 1993.
For context, when these rates were set in 1993, the average new car got approximately 21 miles per gallon, and the average household income was around $43,000. Today, with average household incomes exceeding $70,000 and many new vehicles achieving 30+ miles per gallon, the real-world impact of the federal tax on driver behavior and federal revenue has shifted dramatically. A driver in 1993 purchasing 12 gallons per week paid about $2.21 per week in federal tax; that same driver today, buying the same volume, pays the same $2.21—but this represents a much smaller share of both their income and their total fuel expenditure.
Why Has the Federal Gas Tax Lost Purchasing Power Since 1993?
The federal gas tax has not been indexed to inflation, meaning it does not automatically increase as the cost of living rises. This is fundamentally different from how many other government revenue sources work. income taxes are adjusted through bracket creep, and property taxes adjust with assessed values. But the gas tax sits frozen at a 1993 figure, disconnected from reality. According to analysis from the Tax Foundation, this frozen rate has lost approximately 113 to 122 percent of its purchasing power through 2025, depending on the inflation measure used.
A 30-cent purchase in 1993 would cost approximately 70 cents in 2025 dollars—yet the federal gas tax generates the same revenue per gallon as it did in 1993. This erosion has created a genuine infrastructure funding crisis. The Highway Trust Fund, which relies on these gas taxes, has required repeated infusions of general Treasury revenue to avoid insolvency. Since 2008, Congress has transferred more than $100 billion from the general fund into the Highway Trust Fund to keep highway projects funded. This is not a sustainable model. The Federal Highway Administration estimates that current funding levels support only about 70 percent of the highway system’s maintenance and capital needs, meaning deferred maintenance and aging infrastructure are accumulating nationwide. A freezing of the tax rate decades ago that made sense politically has created a long-term fiscal problem that affects every driver who encounters a pothole, closed bridge, or congested highway.
How Do State Gas Taxes Affect the Total Tax Burden at the Pump?
While the federal tax remains flat, state governments have regularly adjusted their own gas taxes. State rates vary dramatically: California’s state gas tax is approximately 68.3 cents per gallon, Washington state is around 49.4 cents per gallon, and some states like Alaska have rates below 10 cents per gallon. When you combine the federal tax of 18.4 cents with the highest state taxes, drivers in California pay approximately 86 cents per gallon in combined federal and state gas taxes alone—before accounting for local sales taxes, crude oil costs, refining margins, and distribution expenses. This combined burden is close to a record in nominal terms, though when adjusted for inflation it remains lower than peak rates in some states during earlier price spikes.
For a driver in California filling up a 15-gallon tank at current prices around $4.00 per gallon, the combined federal and state gas taxes total approximately $12.90 for that fillup—roughly 22 percent of the total cost. In a state like Texas, where the state gas tax is only 20 cents per gallon, the same 15-gallon fillup incurs about $5.76 in combined federal and state taxes, or approximately 9.6 percent of the total cost. This variation explains why Trump’s claim about “record high gas taxes” resonates differently depending on geography. Californians facing 86 cents per gallon in combined taxes would agree their tax burden is at historical highs. A driver in Texas, paying 38.4 cents per gallon in combined taxes, experiences a lower but still meaningful burden. However, both groups should understand that the federal portion of their tax has not changed since 1993.
What Is Actually Driving the Current High Gas Prices in 2026?
The average U.S. gas price reached approximately $4.00 per gallon as of March 31, 2026, driven primarily by geopolitical factors—specifically the Iran conflict and its impact on global crude oil supplies—rather than by changes to federal or state tax rates. Of that $4.00 price, approximately 18.4 cents is the federal tax, and an average of roughly 35 cents is state and local taxes, with the remainder driven by crude oil costs, refining margins, distribution, and retail markups. The crude oil component has been the volatile element, spiking from around $70 per barrel in early 2025 to over $100 per barrel in March 2026 due to geopolitical tensions. This distinction matters for policy and politics.
If high gas prices were caused by high tax rates, then suspending or reducing taxes would provide meaningful relief. But if high prices are driven by crude oil costs, then reducing the tax provides only modest relief—18.4 cents per gallon at best, or about 4.6 percent relief from a $4.00 price. A driver paying $60 to fill up a 15-gallon tank would save approximately $2.76 if the federal tax were suspended, while crude oil volatility and geopolitical events remain outside U.S. government control. Meanwhile, President Trump indicated in March 2026 that he was considering suspending the federal gas tax to provide relief, which would cost the Highway Trust Fund approximately $13.5 billion per year based on 2025 consumption levels, further straining already-insufficient highway maintenance funding.
Is Trump Proposing to Suspend the Federal Gas Tax?
In March 2026, President Trump indicated that he was considering suspending the federal gas tax amid high gas prices. He signaled this proposal as an economic relief measure, arguing that removing the 18.4-cent federal tax would reduce pressure on consumers and help address inflation concerns. If implemented, such a suspension would provide immediate relief at the pump, with drivers potentially seeing prices drop by approximately 18-20 cents per gallon—assuming oil companies did not absorb the savings through reduced production or other margin adjustments. However, a suspension of the federal gas tax would create serious infrastructure consequences.
The Highway Trust Fund would lose approximately $13.5 billion in annual revenue, according to current fuel consumption estimates. This fund currently covers about 70 percent of America’s highway maintenance and capital needs, with Congress already supplementing it with general Treasury revenue. A suspension would accelerate the backlog of deferred maintenance, likely leading to more closed highways, delayed bridge repairs, and reduced capacity for new transportation projects. States would face pressure to increase their own gas taxes to compensate, potentially creating a patchwork where consumers in some states see relief while others see taxes rise to maintain local infrastructure. The long-term economic cost of deferred infrastructure maintenance—through increased vehicle damage, longer commute times, and reduced economic productivity—could exceed the short-term relief provided by a gas tax suspension.
How Have Federal Gas Taxes Compared Across Different U.S. Administrations?
The federal gas tax rate was last increased on October 1, 1993, during the Clinton administration, when it was raised from 14 cents to 18.4 cents per gallon—a 4.4-cent increase. Before that, it had been 14 cents since April 1983, under the Reagan administration.
The 1993 increase was the last time Congress adjusted the federal gas tax, meaning every administration since Clinton—Republican and Democratic—has left the rate untouched for 33 years. While some policy experts across both parties have discussed indexing the gas tax to inflation, no such legislation has passed. The result is that the federal tax’s real value has deteriorated consistently, creating a deteriorating revenue base for highway funding even as infrastructure needs have grown with vehicle miles traveled increasing 50 percent since 1993.
What Does the Future Hold for Federal Gas Tax Policy and Highway Funding?
The intersection of Trump’s March 2026 proposal to suspend the federal gas tax and the existing funding crisis creates a critical choice point for infrastructure policy. A suspension would provide immediate consumer relief but would worsen the underfunding of America’s highway system, potentially costing the economy far more in lost productivity and vehicle damage than drivers would save at the pump. Alternatively, Congress could move toward indexing the federal gas tax to inflation, which would gradually increase the rate to reflect economic reality and help the Highway Trust Fund become self-sustaining. Other proposals on the table include shifting to a vehicle-miles-traveled tax, which would tax drivers based on distance driven rather than fuel consumed—a system that would better reflect actual road usage and would not penalize electric vehicle owners, who pay no federal gas tax despite using public roads.
The political momentum currently favors tax suspension or reduction rather than increases, even modest inflation adjustments. This suggests that highway funding will likely continue to rely on supplemental appropriations from the general Treasury, with users of the highway system paying only a portion of the true cost through fuel taxes. That arrangement shifts the tax burden to general taxpayers, including those who do not drive, and ensures that infrastructure maintenance remains an ongoing point of budgetary conflict. For drivers, the practical implication is that the federal gas tax will likely remain frozen for years to come, even as purchasing power continues to erode and infrastructure deficits grow.
Conclusion
President Trump’s claim that gas taxes are at record highs is technically accurate when referring to the combined burden of federal, state, and local taxes in high-tax states, and when considering that total pump prices have reached approximately $4.00 per gallon in March 2026. However, the federal gas tax itself—18.4 cents per gallon—has not changed since 1993 and remains frozen at a rate that has lost 113-122 percent of its purchasing power. The current high gas prices are driven primarily by geopolitical factors affecting crude oil supplies, not by changes to federal tax policy.
Drivers and policymakers should understand the distinction between the tax rate (frozen for 33 years) and the total pump price (volatile and currently high). If Trump suspends the federal gas tax, it would provide limited relief—approximately 18-20 cents per gallon—while creating serious long-term consequences for highway maintenance and infrastructure funding. For consumers focused on fuel costs, the real variables to watch are crude oil prices, refining capacity, and geopolitical events rather than federal gas tax policy.