Topline
President Donald Trump on Monday said he planned to suspend the federal gas tax to provide some economic relief as fuel prices have soared since the start of the Iran war, CBS News reported, though the move would be a drop in the bucket for consumers given the historic surge in gas prices lately.
Average gas prices have soared by more than 50% since the start of the Iran war.
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Key Facts
Trump, in an interview on Monday with CBS News, said he would suspend the federal gas tax for a “period of time,” noting the tax would be reimplemented once gas prices go down.
Removing the federal taxes—totaling 18.3 cents per gallon of gasoline and 24.3 cents per gallon of diesel—would reduce the average price for a gallon of gas to about $4.33, down from $4.52, according to the latest gas price stats from AAA.
The cost for a gallon of diesel would drop to roughly $5.38, down from $5.63.
Trump’s statement follows Energy Secretary Chris Wright’s suggestion on Sunday that the Trump administration would consider pausing federal gas taxes, telling NBC’s “Meet the Press, “All measures that can be taken to lower the price at the pump and lower the prices for Americans, this administration is in support of.”
What To Watch For
Suspending the excise taxes requires an act of Congress, though some Democratic lawmakers, including Sens. Mark Kelly, D-Ariz., and Richard Blumenthal, D-Conn., introduced legislation in March to pause the tax.
Surprising Fact
Some states have moved to suspend additional gas taxes: Indiana Gov. Mike Braun last week extended his state’s 36-cent gas tax suspension for 30 days, and Georgia Gov. Brian Kemp suspended the state’s 33-cent tax for 60 days on March 10, citing rising fuel prices that had “adversely impacted” taxpayers.
Big Number
$4 billion. That’s how much the Highway Trust Fund, the federal government’s fund to support highway and mass transit projects, brought in through taxes in March, according to Transportation Department data. Those taxes include federal fuel taxes and other highway-related taxes, including smaller amounts from trucking-related excise taxes.
Key Background
Americans have increasingly cited surging gas prices as detrimental to their personal finances since the U.S. struck Iran. The average price for a gallon of gas in the U.S. was just under $3 two days before the conflict began, and costs have risen as high as $6.16 on average in California. Consumer sentiment, a monthly measurement of Americans’ views on the economy, dropped to an all-time low in May after consumers said they felt “buffeted by cost pressures, led by soaring prices at the pump,” a survey found. Inflation rose by nearly a full percentage point in March, the largest month-to-month jump since April 2021, as fuel oil costs rose 44.2% and gas prices surged nearly 19% on an annual basis. The Bureau of Labor Statistics tracked an 11% monthly increase in prices across the energy sector that month, its largest increase since 2005.