Gas Tax Holiday: What It Really Means for Consumers

The average price of gasoline across the country was $4.53 per gallon as of Thursday, up from $4.12 a month ago, and $3.18 last year.
Proposals for a gas tax holiday are gaining traction, but experts warn it may not bring significant savings for consumers.
The federal gas tax funds the Highway Trust Fund, which supports highway maintenance and mass transit projects.
Cutting off revenue, even temporarily, could exacerbate the problem of poor infrastructure, with nearly 40% of the country’s highways and roadways in need of repair.
The closure of the Strait of Hormuz has cut a massive amount of global oil supply suddenly off from the market, contributing to high fuel prices.

As the unofficial start to summer travel season nears, gas prices remain stubbornly high across the country, prompting President Donald Trump and lawmakers from both parties to consider suspending the fuel tax US consumers pay. However, experts tell WIRED that it’s unlikely that any rollback—even temporary—of the fee will save consumers much. The average price of gasoline across the country was $4.53 per gallon as of Thursday, up from $4.12 a month ago, and $3.18 last year, according to AAA.

The idea of a gas tax holiday is not new, but it has gained momentum in recent months as fuel prices have continued to rise. The federal gas tax, which is a little over 18 cents a gallon, has never been suspended since its creation in 1932. However, politicians from both sides of the aisle have put forward a variety of bills this year that would temporarily lift the federal tax.

Gas Tax Holiday: The Full Story Explained

Even if the tax is suspended for the summer, drivers wouldn’t necessarily see much in the way of savings. Prices at the pump are decided by a number of different factors, from refining costs to the costs to operate gas stations. The price of oil has also fluctuated wildly, with Brent crude—a key benchmark—rising to an all-time high of $144 per barrel on the night of April 7, when Trump and the Iranian government brokered a 2-week ceasefire. It currently sits around $105 a barrel, still much higher than the average of $69 in 2025.

According to Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis, “It's unlikely that oil prices, gasoline prices, diesel prices are going to fall back to where they were in February any time in the next couple months.” This is because the closure of the Strait of Hormuz, one of the world’s most crucial shipping routes and a chokepoint for both oil and gas supply and production, has remained effectively closed since early March, when the US and Israel first launched strikes against Iran.

Historical Context: Has This Happened Before?

The current energy crisis is widely agreed to be one of the worst in history, with the closure of the Strait of Hormuz cutting a massive amount of global oil supply suddenly off from the market. However, this is not the first time that the Strait of Hormuz has been closed. In 1980, during the Iran-Iraq War, the Strait was closed for several months, leading to a significant increase in oil prices. Similarly, in 2012, Iran threatened to close the Strait in response to Western sanctions, leading to a spike in oil prices.

According to Tyson Slocum, the director of the energy program at the progressive think tank Public Citizen, “When you take away the retail gas tax, it's not going to have a dramatic effect [for consumers]. But what would be dramatic is loss in federal revenues.” The federal gas tax funds the Highway Trust Fund, which supports highway maintenance and mass transit projects. Cutting off revenue, even temporarily, could exacerbate the problem of poor infrastructure, with nearly 40% of the country’s highways and roadways in need of repair.

Gas Tax Holiday: Economic & Real-World Impact

The impact of a gas tax holiday would be felt by consumers, businesses, and the economy as a whole. For consumers, the savings from a gas tax holiday would be minimal, at best. According to Williams-Derry, “An oil tanker moves as fast as a bicycle. It’s a significant trip.” This means that even if the Strait of Hormuz were to open up tomorrow, the effects of the new supply could take a while to reach consumers—likely a month or more as tankers travel to customers and production facilities start back up again.

For businesses, the impact of a gas tax holiday would depend on the industry. For example, trucking companies and airlines would likely see significant savings from a gas tax holiday, as fuel costs are a major expense for these industries. However, other businesses, such as gas stations and convenience stores, could see a decline in sales if consumers are not paying as much for gas.

Expert Analysis & What Comes Next

According to experts, the current energy crisis is likely to continue for the foreseeable future, with the closure of the Strait of Hormuz and the resulting increase in oil prices. As Slocum notes, “The loss of federal revenues available to ensure that our transportation infrastructure remains sound, it’s just not a good deal for consumers.”

“The idea of a gas tax holiday is a short-term fix that doesn’t address the underlying issues of our energy policy,” says Williams-Derry. “We need to be looking at long-term solutions, such as increasing fuel efficiency standards and investing in alternative energy sources.”

There are several plausible scenarios for how this situation could develop. One scenario is that the Strait of Hormuz could be reopened, leading to a decrease in oil prices and a subsequent decrease in gas prices. Another scenario is that the energy crisis could continue, with oil prices remaining high and gas prices following suit. A third scenario is that the US could see a significant increase in domestic oil production, which could help to offset the impact of the energy crisis.

What This Means For You: Practical Guidance

So, what does this mean for you? If you’re a consumer, it’s unlikely that a gas tax holiday would have a significant impact on your wallet. However, there are steps you can take to reduce your fuel costs. For example, you can consider carpooling or using public transportation, or you can look into purchasing a more fuel-efficient vehicle. If you’re a business owner, you may want to consider ways to reduce your fuel costs, such as optimizing your routes or investing in fuel-efficient vehicles.

Frequently Asked Questions

What is a gas tax holiday?

A gas tax holiday is a temporary suspension of the federal gas tax, which is currently 18 cents per gallon. The idea behind a gas tax holiday is to provide relief to consumers who are struggling with high gas prices.

How would a gas tax holiday affect me?

The impact of a gas tax holiday would depend on your individual circumstances. If you drive a lot, you may see some savings from a gas tax holiday. However, if you don’t drive much, you may not see much of an impact.

What are the potential downsides of a gas tax holiday?

One potential downside of a gas tax holiday is that it could lead to a decline in revenue for the Highway Trust Fund, which supports highway maintenance and mass transit projects. This could exacerbate the problem of poor infrastructure in the US.

How long would a gas tax holiday last?

The length of a gas tax holiday would depend on the specific proposal. Some proposals would suspend the gas tax for a few months, while others would suspend it for a year or more.

What are some alternative solutions to a gas tax holiday?

Some alternative solutions to a gas tax holiday include increasing fuel efficiency standards, investing in alternative energy sources, and improving public transportation. These solutions could help to reduce our reliance on fossil fuels and mitigate the impact of high gas prices.

In conclusion, a gas tax holiday may not be the solution to high gas prices that consumers are hoping for. While it may provide some short-term relief, it could also lead to a decline in revenue for the Highway Trust Fund and exacerbate the problem of poor infrastructure in the US. Instead, we should be looking at long-term solutions, such as increasing fuel efficiency standards and investing in alternative energy sources.

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