Swansenreport

The Gas Tax Holiday That May Never Come — And Why That’s Actually Complicated

If you’ve filled up lately, you already know gas prices are brutal. The national average has soared, with prices above $4 per gallon nationally — in some markets well above that — driven largely by the Iran war that began in February. President Trump floated a fix in May: suspend the federal gas tax. It sounds simple. It isn’t.

The federal gas tax currently runs 18.4 cents per gallon for regular gasoline and 24.4 cents per gallon for diesel. Lifting it would require an act of Congress, which has sole authority over federal taxation. That has never actually happened in the nearly century-long history of the tax, despite proposals from both parties.

On May 11, Senator Josh Hawley of Missouri introduced the Gas Tax Suspension Act, which would reduce the tax rate on gasoline and diesel to zero for at least 90 days. Republican colleagues in the House followed with companion bills. On the Democratic side, Senators Mark Kelly of Arizona and Richard Blumenthal of Connecticut had already introduced legislation to suspend the tax through October 1. So there’s bipartisan appetite — at least in the abstract.

Senate Majority Leader John Thune threw cold water on the idea almost immediately. “The gas tax of course pays for highways and bridges, and so if you suspend it, it means you don’t have the money going into the highway trust fund,” Thune said.

That’s the crux of the problem. The Highway Trust Fund — which pays for road construction and repairs across the country — is already running a $17 billion shortfall in 2026. Congress has to make up the gap with general taxpayer funds every year. A three-month suspension would create an additional $10.5 billion hole in the fund, including roughly $3 billion in interest costs on any borrowing needed to cover it. The Committee for a Responsible Federal Budget estimates that a gas tax holiday would cause the Highway Trust Fund to run dry seven weeks earlier than currently projected — and it’s already facing insolvency as soon as 2028.

For Wisconsin, that’s not an abstraction. The state receives hundreds of millions annually from the Highway Trust Fund for road and bridge maintenance. Anyone who has driven Highway 2 along the South Shore knows what deferred infrastructure investment looks like.

The savings to drivers are also smaller than the political rhetoric suggests. At 18.4 cents per gallon, a full pass-through of the tax cut would save a typical driver less than $9 per month — assuming gas stations actually lower prices rather than pocket the difference, which past gas tax holidays suggest is not guaranteed.

Opposition is coming not just from Democrats but from Republican-leaning industries. Trucking and construction trade groups are both pushing back, warning that without replacement funds, highway safety and infrastructure projects would be undermined.

The gasoline tax hasn’t been raised since 1993. Adjusted for inflation, it has lost almost half its value since then — which is a large part of why the Highway Trust Fund can’t pay its own bills anymore. A temporary holiday would make a structural problem worse, not better.

The hearing clip making the rounds on social media — Treasury Secretary Scott Bessent sparring with Connecticut Congressman John Larson over whether he supports eliminating the gas tax — is a sideshow. The real question is whether Congress will pass any gas tax relief, who pays for the Highway Trust Fund shortfall if they do, and what that means for infrastructure in states like Wisconsin that depend on federal road dollars.

As of early June, no bill has cleared committee in either chamber.

Sources: ABC News, May 11, 2026 (https://abcnews.com/Politics/trump-floating-gas-tax-holiday-amid-rising-fuel/story?id=132859509); NPR, May 28, 2026 (https://www.npr.org/2026/05/28/nx-s1-5835634/gasoline-tax-holiday-trump-potholes); CNBC, May 12, 2026 (https://www.cnbc.com/2026/05/12/trump-gas-tax-suspension.html); CNBC, May 13, 2026 (https://www.cnbc.com/2026/05/13/trump-construction-iran-war-trucking-construction-gas-tax-holiday.html); Reason, June 5, 2026 (https://reason.com/2026/05/18/trumps-federal-gas-tax-holiday-would-save-drivers-less-than-9-per-month/); PolitiFact, May 12, 2026 (https://www.politifact.com/article/2026/may/12/trump-gasoline-diesel-tax-highway-trust-fund/); Committee for a Responsible Federal Budget (via Reason/CNBC reporting)