The Highway Trust Fund is the federal government’s dedicated account for building and maintaining roads, bridges, and public transit. Created in 1956, it runs on a user-pay model: fuel taxes and a handful of truck-related excise taxes flow in, and the money flows back out to states as reimbursement for federal-aid highway and transit projects. The fund has spent more than it collects for nearly two decades, and its current authorization under the Infrastructure Investment and Jobs Act expires on September 30, 2026.1Federal Highway Administration. Infrastructure Investment and Jobs Act (IIJA)
Where the Money Comes From
Fuel taxes do most of the work. The federal excise tax is 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel, with an additional 0.1 cent on both going to the separate Leaking Underground Storage Tank Trust Fund.2GovInfo. 26 USC 4081 – Imposition of Tax3U.S. Environmental Protection Agency. Leaking Underground Storage Tank Trust Fund Those rates were set by the Omnibus Budget Reconciliation Act of 1993 and have not moved since.4Federal Highway Administration. When Did the Federal Government Begin Collecting the Gas Tax?
Three other taxes fill in around the fuel tax, all of them aimed at heavy commercial vehicles that cause the most road wear. Trucks weighing 55,000 pounds or more owe an annual heavy vehicle use tax that tops out at $550 for the heaviest rigs.5Office of the Law Revision Counsel. 26 USC 4481 – Imposition of Tax The first retail sale of truck chassis, truck bodies, trailers, and highway tractors carries a 12 percent excise tax.6Office of the Law Revision Counsel. 26 USC 4051 – Imposition of Tax on Heavy Trucks and Trailers Sold at Retail Heavy truck tires over 40 pounds are taxed on a graduated scale that rises with weight.7eCFR. 26 CFR 48.4071-1 – Imposition and Rates of Tax
Not every gallon sold feeds the fund. Fuel used on farms, in off-highway equipment like forklifts and bulldozers, by state and local governments, by school and transit buses, and fuel exported from the country all qualify for credits, refunds, or reduced rates.8Internal Revenue Service. Publication 510, Excise Taxes
Two Accounts, One Fund
The Highway Trust Fund is split into a Highway Account and a Mass Transit Account. The transit account was added by the Surface Transportation Assistance Act of 1982; before that, the fund financed roads only.9Federal Highway Administration. Funding Federal-Aid Highways – The Highway Trust Fund
The split follows a statutory formula. Of each gallon’s fuel tax, 2.86 cents goes to the Mass Transit Account. The remaining 15.44 cents per gallon of gasoline and 21.44 cents per gallon of diesel flow to the Highway Account, along with all the heavy vehicle, retail, and tire tax receipts.10Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund Treasury tracks the accounts separately. Through the first portion of fiscal year 2026, the Highway Account had taken in roughly $18.6 billion in net receipts and interest, and the Mass Transit Account about $2.8 billion.11Federal Highway Administration. Status of the Highway Trust Fund
What the Fund Pays For
The federal government does not build highways directly. It reimburses state and local agencies for construction, maintenance, and safety work on the Interstate System and other federally designated routes. States plan, contract, and build, then bill the Federal Highway Administration for the federal share.
That share depends on the project. Interstate System work is reimbursed at 90 percent of total cost. Most other Highway Account projects are reimbursed at 80 percent, with a 95 percent ceiling in certain circumstances.12Office of the Law Revision Counsel. 23 USC 120 – Federal Share Payable13Federal Highway Administration. Federal Share – FAST Act Fact Sheets States must budget the rest before a project can proceed.
Mass Transit Account dollars run through the Federal Transit Administration and pay for a different mix of work: bus systems, subway and light rail construction, transit vehicles, and rail station rehabilitation. Distribution happens through formula grants and competitive awards.
Money sitting in the fund is not the same as money that can be spent. Congress sets an annual obligation limitation that caps how much can be committed to projects each year. If projected fuel tax receipts decline, that ceiling can be adjusted downward, which directly reduces what states can spend on federal-aid projects even if the fund’s balance looks healthy.
Why the Fund Is Running Short
The math has turned against a per-gallon tax. Fuel tax rates have been frozen since 1993, but vehicles have gotten much more efficient. The average light-duty vehicle got 13.1 miles per gallon in 1975 and 27.1 miles per gallon by 2023, so each mile driven now generates roughly half the tax it once did.14Congress.gov. Electric Vehicle Taxes and the Federal Highway Trust Fund Construction material and labor costs have climbed at the same time.
Congress has closed the gap with transfers from the general treasury. Since 2008, roughly $275 billion has been moved from general revenue into the fund to keep both accounts solvent, with about $118 billion of that coming from the Infrastructure Investment and Jobs Act alone.15Congress.gov. Transfers to the Highway Trust Fund Those transfers come from income taxes and borrowing rather than road users, which cuts against the user-pay principle the fund was built on.
The Congressional Budget Office’s February 2026 baseline projects the Highway Account will hold about $36.4 billion and the Mass Transit Account about $8.2 billion at the end of fiscal year 2026. Shortfalls in both accounts begin in fiscal year 2027, and the Highway Account balance approaches zero by fiscal year 2028.16Congressional Budget Office. Highway Trust Fund Accounts Baseline Over the decade from 2026 to 2035, the CBO projects an average annual deficit of $41 billion.14Congress.gov. Electric Vehicle Taxes and the Federal Highway Trust Fund
When cash runs low, the Federal Highway Administration switches to what it calls cash management procedures. Reimbursements to states slow down, which slows payments to contractors, which slows construction. States keep some control over which projects get paid first, but planned work stalls.17U.S. Department of Transportation. DOT Memo on Reimbursement Procedures During a Cash Shortfall of the Highway Trust Fund
The September 30, 2026 Deadline
The Infrastructure Investment and Jobs Act authorized federal highway and transit programs through September 30, 2026.1Federal Highway Administration. Infrastructure Investment and Jobs Act (IIJA) After that date, without new legislation, no new contract authority can be issued for federal-aid highway projects. This is the fund’s most immediate risk.
Every previous authorization, including SAFETEA-LU, MAP-21, and the FAST Act, expired before Congress passed a successor bill, and each time Congress approved short-term extensions to keep money flowing while negotiations continued.18Congress.gov. Surface Transportation Reauthorization: Federal Highway Programs Extensions keep the lights on but create planning uncertainty for state transportation departments and do nothing about the long-term revenue problem.
The fund cannot legally go negative. If it were depleted without a reauthorization or a bailout in place, the Department of Transportation could slow payments to states and reduce apportionments, effectively freezing new commitments.18Congress.gov. Surface Transportation Reauthorization: Federal Highway Programs Money already obligated to specific projects stays in the fund until states submit reimbursement requests for completed work, and some of those obligations from the current authorization could take years to spend down.
What Might Replace the Gas Tax
A tax measured in gallons gets weaker as vehicles use fewer gallons. Electric vehicles, which made up about 1.2 percent of light-duty vehicles on U.S. roads in 2023, pay no federal fuel tax at all.14Congress.gov. Electric Vehicle Taxes and the Federal Highway Trust Fund The near-term revenue loss is still modest, but the direction is unmistakable.
The IIJA directed the Department of Transportation to run a national pilot testing a per-mile user fee as an alternative to the fuel tax. Participation is voluntary, drivers must come from all 50 states, and the pilot tests different methods for tracking miles, collecting revenue, and protecting privacy. DOT reports findings to Congress annually, and program funding runs through fiscal year 2026.19Alternative Fuels Data Center. Federal System Alternative Funding Pilot20GovInfo. 23 USC 503 – Research and Technology Development and Deployment A mileage fee would charge electric and hybrid drivers the same as gas-powered drivers for identical road use. Privacy concerns, collection logistics, and rural opposition all complicate adoption.
Several proposals have targeted electric vehicles directly, including a one-time fee on new EV sales and a separate fee on heavy battery modules to account for the extra road wear from heavier vehicles. No federal EV fee has been enacted as of 2026, though many states have already added annual registration surcharges on electric vehicles to recover lost fuel tax revenue.
The tension underneath the reauthorization debate is that federal policy encourages fuel efficiency and electric vehicle adoption while federal road funding still depends on fuel consumption. Whatever Congress passes next has to resolve that contradiction or keep papering over it with general fund transfers.