Trump Gas Tax Holiday Plan Threatens Infrastructure Funding

President Trump has proposed suspending the federal gas tax to ease financial pressure on drivers, but experts warn the move could accelerate a looming infrastructure funding crisis. The 18.4-cents-per-gallon federal tax, unchanged since 1993, is the primary revenue source for the Highway Trust Fund, which already faces a projected $17 billion shortfall this year.

According to NPR, Trump initially voiced strong support for a temporary waiver on May 11, telling reporters, “Yup, we’re going to take off the gas tax for a period of time.” However, at a Cabinet meeting on May 27, his commitment appeared to waver. When asked about the proposal, Trump responded, “We’ll see what happens over the next week or two weeks.”

The Cost of a Gas Tax Holiday

The Penn Wharton Budget Model estimates that a four-month suspension running from June through September would cost the Highway Trust Fund approximately $11.5 billion in lost revenue — equivalent to about 19 percent of the fund’s annual spending. The Committee for a Responsible Federal Budget calculates that a six-month holiday would cost roughly $21 billion and accelerate the trust fund’s projected insolvency from 2028 to as early as September 2027.

Not all of the tax savings would reach consumers. Penn Wharton estimates that only about 72 percent of the tax cut — roughly 13.2 cents per gallon — would actually be passed through to drivers, with suppliers capturing the remainder. For a household filling a 15-gallon tank once per week over the four-month period, the total savings would amount to approximately $35.

“What we generally think is that over long periods of time, most of the tax cut would go to consumers,” said Kent Smetters, faculty director at the Penn Wharton Budget Model. “But over shorter periods of time, suppliers — even though it’s fairly competitive to sell gas — they still have some market power.”

A Broken Funding Model

The gas tax holiday debate highlights a deeper structural problem: the federal gas tax is no longer a sustainable funding source for the nation’s roads and bridges. The Tax Foundation notes that the Highway Trust Fund has depended on general revenue transfers for nearly 20 years, as highway spending has consistently exceeded fuel tax revenue.

Three trends have eroded the tax base: inflation has cut the tax’s purchasing power by nearly half since 1993, vehicles have become more fuel-efficient, and electric vehicle adoption has grown. The Congressional Budget Office projects the trust fund will run out of money by 2028 without reform.

Adam Hoffer, director of excise tax policy at the Tax Foundation, described the original gas tax system as “a terrific system” where drivers paid for roads through fuel purchases. But the tax has not been raised in 33 years, and the revenue shortfall has grown steadily.

Limited Consumer Relief

Gas prices have surged to a four-year high, with the national average reaching $4.46 per gallon on May 27, up from approximately $2.98 before the Iran war began on February 28. The conflict disrupted the Strait of Hormuz, through which roughly 20 percent of global oil passes daily.

Patrick De Haan, head of petroleum analysis at GasBuddy, told NPR that it would take 13 months of a suspended federal gas tax to offset the price increases caused by the Iran conflict. The modest relief a gas tax holiday would provide has led some critics to question its value.

Rob Bhatt, an insurance analyst at LendingTree, warned that “anytime you take away a source of funding for highway construction and maintenance, then you’re running the risk of the roads getting worse and not better.” A LendingTree report found that 8.9 percent of U.S. road miles are in poor condition, with pothole-related damage costing drivers an estimated $26.5 billion in repairs in 2021.

Political Prospects Uncertain

A federal gas tax holiday would require an act of Congress, and bipartisan bills have been introduced. Sen. Josh Hawley (R-MO) and Sen. Mark Kelly (D-AZ) have each proposed suspension legislation. However, Republican leadership has shown little enthusiasm. House Speaker Mike Johnson and Senate Majority Leader John Thune have indicated they would prefer to see eased tensions in the Strait of Hormuz rather than pursue a tax suspension.

PolitiFact notes that gas tax holidays have been proposed multiple times — including in 2008 and 2022 — but have never been implemented. The proposal faces headwinds from both fiscal conservatives concerned about the deficit and infrastructure advocates worried about the Highway Trust Fund’s solvency.

What’s Next

With midterm elections approaching and 63 percent of Americans reporting that their household finances have worsened due to gas costs, according to a Reuters/Ipsos poll, pressure on lawmakers to act is mounting. But the combination of Trump’s apparent backtracking, leadership skepticism, and the historical failure of similar proposals suggests the gas tax holiday faces an uphill battle.

Meanwhile, the broader question of how to fund America’s infrastructure remains unresolved. The Tax Foundation and other policy groups have proposed alternatives including vehicle miles traveled (VMT) fees, weight-based registration fees, and congestion pricing — but none has gained the political traction needed to replace the aging gas tax.

As the Highway Trust Fund approaches insolvency and roads continue to deteriorate, the gap between what drivers pay and what infrastructure costs is only widening.