Gas prices last week at my neighborhood H-E-B. (Photo by Kay Bell)
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The president wants a federal gas tax holiday. So do some state leaders. But at either level, the move likely wouldn’t provide much gas pump price relief. And it could hurt other state and federal projects that drivers (and the rest of the electorate) support, as well as worsen governments’ overall fiscal status.
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The White House wants Congress to suspend the federal gas tax, which adds $18.4 cents to each gallon of gas, until fall.
It’s an understandable political idea. The summer vacation season unofficially starts with the end-of-May long Memorial Day weekend, and most of us in the United States drive to our holiday destinations.
But energy and tax analysts say a federal gas tax holiday wouldn’t make up for the pump price increases of about 50 percent that drivers have been paying since Israel and the United States launched the war against Iran.
State tax holidays, too: Still, tax cuts are always an easy way for politicians to pander appeal to voters. That’s why some state legislators also are taking, or at least talking about, a gas tax holiday route.
At last count, four states — Georgia, Indiana, Utah, and Kentucky — have enacted or are actively considering state fuels tax holidays. Texas state lawmakers also are kicking around the idea.
A gas tax suspension here in the Lone Star State really wouldn’t make that much difference since the state excise tax is among the lowest in the country (more on this coming up).
Other states’ fuel excise (and other) taxes, however, do add substantially to the price that their drivers pay to fill up their tanks.
Wide range of state fuel taxes: Currently, every state and Washington, D.C., levies its own per-gallon gasoline excise rate.
While the federal excise tax on gasoline has been stuck at 18.4 cents per gallon (cpg) since 1993, states are more mobile when it comes to their levels.
The U.S. Energy Information Administration (EIA) map below shows state gasoline taxes and fees at the start of 2026.
As the EIA map title notes, some states add other types of taxes and fees to gas purchases in addition to their specific fuel excise tax. These include charges for states’ hazardous substance cleanup funds, various environmental protection or remediation programs, and underground storage facilities.
And if your vehicle runs on diesel, your state’s excise tax for that fuel will be greater than its levy on gasoline. At the federal level, the diesel tax rate is 24.3 cpg, plus a 0.1 cent Leaking Underground Storage Tank fee.
Here’s a closer look at how these charges vary across the country.
States with the highest gas taxes: California is a perfect storm when it comes to gas prices, notes USAFacts.
The Golden State requires a particular blend of gasoline intended to improve air quality, but that gas uses more expensive components and extra steps in the refining process, which increases prices at the pump.
It also has environmental compliance requirements that the California Energy Commission estimated in March 2025 could add as much as 54 cpg.
Plus, it’s far from Gulf Coast refineries, making it vulnerable to supply issues.
That’s why California is always atop the list of the states with the highest gas taxes. Three other states join California in states collecting more than half a dollar per gallon in excise tax. Here’s the current top 10, via USAFacts and EIA data.
| California | $0.61 |
| Pennsylvania | $0.58 |
| Washington | $0.55 |
| Michigan | $0.52 |
| Illinois | $0.48 |
| North Carolina | $0.41 |
| Rhode Island | $0.40 |
| Oregon | $0.40 |
| Ohio | $0.39 |
| Utah | $0.38 |
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States with the lowest gas taxes: My fellow Texans and I are among the U.S. drivers who pay a low state gasoline excise tax. That’s not surprising given the number of oil companies and refineries based here.
But it’s Alaska, which bumped us from being the biggest land mass (and forced a rewrite of our state song), is the leader when it comes to the lowest of state gas tax. Or actually, co-leader. New York’s gas tax matches that of the Last Frontier.
Again from USAFacts and EIA, here are the 10 states with the smallest gas taxes.
| Alaska | $0.08 |
| New York | $0.08 |
| New Jersey | $0.11 |
| Vermont | $0.12 |
| Hawaii | $0.16 |
| New Mexico | $0.17 |
| Arizona | $0.18 |
| Oklahoma | $0.19 |
| Louisiana | $0.20 |
| Texas | $0.20 |
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Any tax holiday is not wise: Most tax experts agree that tax holidays of any type are not smart or effective.
The Tax Foundation, a tax policy think tank in Washington, D.C., is blunt in its analysis. Gas tax holidays don’t actually work.
Hoffer, the Tax Foundation’s Director of Excise Tax Policy, acknowledges that the tax breaks are tempting politically. But there are notable practical downsides.
One of the major drawbacks is that pausing fuel taxes makes funding roads and highways more difficult, while doing nothing to address the underlying issues driving prices upward.
The Tax Foundation also reiterates that in general, tax holidays (be they sales tax or gas tax) do not promote economic growth, but instead complicate the tax code and weaken state and federal government revenue streams.990000
Federal tax holiday outlook not good: At the federal level, Representatives and Senators have talked about a national gas tax holiday over the years. It’s never happened.
The last time Congress tried and failed was back in 2022. That bill proposed to temporarily suspend the federal gas tax due to high inflationary pressures and the war in Ukraine.
Part of the reason that effort three years ago failed was the cost. The Committee for a Responsible Budget estimated that the proposed gas tax holiday would reduce gas tax revenues by roughly $20 billion.
The D.C.-based nonpartisan, non-profit fiscal policy organization also warned it could worsen inflation once the holiday expired.
So, despite being a master behind the presidential bully pulpit, at least within the Republican Party, it might be hard for Donald Trump to get his wished for federal gas tax holiday.
You also might find these items of interest:
- How your state pays for its roads
- GOP transportation bill calls for federal EV, hybrid fees
- Gasoline tax considerations for Memorial Day 2024 travel
- July 4, 2025, holiday motorists in 12 states are paying higher gasoline taxes
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