The federal gas tax is 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. Congress set those rates in 1993 and has not touched them since. You never write a check for the tax, because it’s built into the price you pay at the pump, and almost every cent flows into the Highway Trust Fund, which pays for federal highways and public transit.
Current Rates on Gasoline, Diesel, and Alternative Fuels
Gasoline carries a base rate of 18.3 cents per gallon plus a 0.1-cent surcharge that funds the Leaking Underground Storage Tank Trust Fund, for an effective rate of 18.4 cents. Diesel and kerosene are taxed at 24.3 cents plus the same 0.1-cent surcharge, totaling 24.4 cents per gallon.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
Alternative fuels sit under a separate provision. Propane and compressed natural gas are taxed at 18.3 cents per energy equivalent of a gallon of gasoline; liquefied natural gas is taxed at 24.3 cents per energy equivalent of a gallon of diesel.2Office of the Law Revision Counsel. 26 USC 4041 – Imposition of Tax The tax is pegged to energy content because a physical gallon of propane or CNG holds less energy than a gallon of gasoline.
State and local fuel taxes stack on top of the federal rate. They vary widely but average roughly 33 cents per gallon nationwide, so total government tax on a gallon of gasoline often clears 50 cents before you count the price of the fuel itself.
How the Tax Gets Collected
You pay the federal gas tax every time you fill up, but the transaction that triggers it happens far upstream. Under the terminal rack system, the tax attaches the moment fuel leaves a bulk storage terminal for delivery.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax The company pulling fuel off the rack pays the tax and then folds the cost into the wholesale price it charges distributors, who pass it to gas stations, who pass it to you.
The design is deliberate. Collecting from a few thousand refiners and terminal operators is far easier than chasing hundreds of thousands of gas stations. Bulk fuel companies must first clear the IRS 637 Registration Program before they can buy, sell, or move fuel tax-free within the terminal system.3Internal Revenue Service. 637 Registration Program Registered payers report and remit fuel excise taxes each quarter on IRS Form 720.4Internal Revenue Service. About Form 720, Quarterly Federal Excise Tax Return
Where the Money Goes
Nearly all federal fuel tax revenue flows into the Highway Trust Fund, which Congress created in 1956 to pay for the Interstate Highway System. The fund is split into two accounts.
The Highway Account gets the bulk of the money. Of the 18.3-cent base rate on gasoline, 2.86 cents is carved off for public transit and the remaining 15.44 cents goes to highways, or about 84 percent of gasoline revenue.5Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund The diesel split runs closer to 88 percent for highways. Highway Account funds pay for building, repairing, and maintaining federal-aid highways, bridges, and safety improvements.
The Mass Transit Account gets the smaller slice, funded by the 2.86-cent carve-out from gasoline and diesel (with slightly different rates for alternative fuels).5Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund It supports transit capital projects like new buses, rail expansions, and subway upgrades, distributed by the Department of Transportation to regional agencies through statutory formulas.
Why the Rate Has Not Moved Since 1993
The gasoline rate has been frozen at 18.4 cents since August 10, 1993, when the Omnibus Budget Reconciliation Act tacked on the last 4.3 cents.6Federal Highway Administration. When Did the Federal Government Begin Collecting the Gas Tax That 4.3-cent slice was originally aimed at deficit reduction and only got redirected to the Highway Trust Fund in 1997. No penny has been added to the rate in the three decades since.
Inflation has done the rest of the work. A dollar in 1993 buys roughly 2.3 times what a dollar buys today, leaving the 18.4-cent rate with the purchasing power of about 8 cents in 1993 terms. Construction costs and maintenance needs have kept climbing, and the fund has fallen further behind each year.
Congress has covered the gap with general-revenue transfers totaling roughly $275 billion since 2008, about 26 percent of the fund’s actual and projected outlays over that period.7Congressional Research Service. Transfers to the Highway Trust Fund Without further bailouts, the Congressional Budget Office projects that both the highway and transit accounts will be exhausted by 2028. Every few years Congress faces the same choice: raise the tax, find a new revenue source, or authorize another transfer. General revenue has won every time.
Who Doesn’t Pay, and Who Can Get It Back
Off-Road Diesel and the Red Dye Rule
Because the fuel tax exists to fund roads, diesel burned off-road is exempt. The tax code requires exempt diesel and kerosene to be dyed with an approved chemical marker and sold only for nontaxable uses like farming, construction, and railroad locomotives.8Office of the Law Revision Counsel. 26 USC 4082 – Exemptions for Diesel Fuel and Kerosene Red is the standard color; blue-dyed diesel is reserved for U.S. government vehicles.
Burning dyed diesel on public roads carries stiff penalties. Each incident is the greater of $1,000 or $10 for every gallon involved, and repeat offenses multiply the $1,000 base amount.9Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use Inspectors can pull samples from vehicle tanks at weigh stations, and the dye shows up immediately.
Fuel Tax Credits and Refunds
If you buy taxed fuel and burn it somewhere other than a public road, you can claim the tax back. Qualifying uses include gasoline or diesel run through farm equipment, fuel powering off-highway business equipment, commercial fishing vessels, certain intercity and school buses, and fuel bought by state and local governments.10Internal Revenue Service. Fuel Tax Credit
You claim the credit on IRS Form 4136, filed with your federal income tax return, which calculates the amount based on gallons used for each qualifying purpose.11Internal Revenue Service. About Form 4136, Credit for Federal Tax Paid on Fuels If you don’t have to file an income tax return, you use Form 8849 to get a direct excise-tax refund instead.12Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025)
Records are the piece most people underestimate. You need proof of ownership for the vehicles and equipment involved, fuel purchase receipts showing date, supplier, gallons, and price, and a log of how many gallons went to each qualifying use.10Internal Revenue Service. Fuel Tax Credit Without substantiation, the credit gets denied on audit. The general refund window is three years from the date you filed the return or two years from the date you paid the tax, whichever is later.
Electric Vehicles
Electric vehicles pay zero federal gas tax because they burn no gasoline or diesel. As EV market share grows, Highway Trust Fund revenue erodes further on top of the inflation problem. States have moved first: forty now charge EV owners a higher annual registration fee to offset lost gas tax revenue, ranging from $50 to $260 depending on the state.13Tax Foundation. Electric Vehicles: EV Taxes by State, 2025
Federally, Congress authorized a per-mile user fee pilot program under Section 13002 of the Infrastructure Investment and Jobs Act, funded at $50 million over five years, that recruits volunteer drivers from all 50 states to test paying by miles traveled rather than gallons purchased.14Federal Highway Administration Office of Operations. Infrastructure Investment and Jobs Act (IIJA) A Federal System Funding Alternative Advisory Board began deliberations in 2025 on fee structures and implementation. Any shift from per-gallon taxes to per-mile fees would need new legislation, and until then the 18.4-cent gasoline tax remains the federal government’s primary tool for funding surface transportation.