What Is the Federal Gas Tax? Rates, Revenue, and Exemptions

The federal gas tax is a per-gallon excise tax the U.S. government charges on motor fuel: 18.4 cents on every gallon of gasoline and 24.4 cents on every gallon of diesel. Congress set those rates in 1993 and has not changed them since. The money goes into the Highway Trust Fund, which pays for federal highways, bridges, and public transit.

The Current Rates

Federal law imposes the tax under 26 U.S.C. § 4081. The base rate is 18.3 cents per gallon for gasoline and 24.3 cents per gallon for diesel and kerosene. On top of each, there is an additional 0.1 cent per gallon that funds the Leaking Underground Storage Tank Trust Fund, which pays to clean up petroleum leaks from underground tanks.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax Add them together and you get the familiar 18.4 cents on gasoline and 24.4 cents on diesel.2Internal Revenue Service. Publication 510, Excise Taxes

Because the tax is a flat number of cents per gallon rather than a percentage of the price, it does not rise with inflation. It has been frozen at the same level for more than three decades while construction and maintenance costs have climbed.

Which Fuels Are Taxed

The tax reaches most fuels that power vehicles and aircraft, not just what you pump into a car:

Who Actually Pays the Tax

Drivers never write a check to the IRS for the gas tax. The legal obligation falls on the “position holder,” the company that owns the fuel inventory at the terminal when it is loaded onto trucks for delivery. If fuel leaves at a refinery rack instead of a terminal, the refiner owes the tax.2Internal Revenue Service. Publication 510, Excise Taxes

From there, the tax is built into the wholesale price and passed down the supply chain. By the time gasoline reaches the pump, the 18.4 or 24.4 cents is already baked into the posted price. You pay it with every fill-up even though the IRS never contacts you about it.

Where the Revenue Goes

All federal fuel tax revenue is deposited into the Highway Trust Fund, a dedicated account Congress created in 1956 to pay for surface transportation.5Federal Highway Administration. Highway Trust Fund and Taxes – FAST Act Fact Sheets Of every gallon of gasoline taxed, the money is split three ways:

Other transportation taxes on heavy trucks and tires flow entirely into the Highway Account.5Federal Highway Administration. Highway Trust Fund and Taxes – FAST Act Fact Sheets

Exemptions and Refunds

Some uses of fuel are exempt from the tax because they do not benefit from federal highways. The main categories under 26 U.S.C. § 4041 include:

Because the tax is collected at the terminal before anyone knows how the fuel will ultimately be used, exempt buyers usually pay the tax first and then recover it. Businesses file Form 8849 with Schedule 1 to claim a refund; the total claim must be at least $750 for the quarter, and the claim must be filed during the first quarter after the period it covers.8Internal Revenue Service. Schedule 1 (Form 8849) Nontaxable Use of Fuels Individuals who buy undyed kerosene for home heating, lighting, or cooking claim a credit of 24.3 cents per gallon on Form 4136 with their annual return, carrying the amount to Schedule 3 of Form 1040. Keep supporting records for at least three years after the return is due or filed, whichever is later.9Internal Revenue Service. 2025 Instructions for Form 4136 – Credit for Federal Tax Paid on Fuels

State Taxes Come on Top

The federal tax is only part of what you pay at the pump. Every state adds its own gasoline tax. As of January 2026, state gasoline taxes averaged 33.5 cents per gallon, with individual rates ranging from 9.0 cents to 70.9 cents.10U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline Combined federal, state, and local taxes on a gallon of gasoline can run from under 30 cents to nearly 90 cents depending on where you live. State fuel taxes pay for state and local road projects and are entirely separate from the Highway Trust Fund. Some states use a flat per-gallon rate like the federal government does; others tie their rate to wholesale prices or index it to inflation.

Why the Rate Hasn’t Kept Up

The Highway Trust Fund has been spending more than the gas tax brings in for well over a decade. Since 2008, Congress has transferred $275 billion, mostly from the Treasury’s general fund, to cover the shortfall. Of that total, $118 billion came through the Infrastructure Investment and Jobs Act (IIJA) in 2021, split between $90 billion for the Highway Account and $28 billion for the transit account.11Congressional Budget Office. The Status of the Highway Trust Fund: 2023 Update

The Congressional Budget Office projects that both the highway and transit accounts will be exhausted by 2028 under current law. Three forces drive the gap. The rate has been frozen since 1993 while construction costs have risen. Vehicles have become more fuel-efficient, so drivers buy fewer gallons per mile. And electric vehicles pay no federal fuel tax at all.

What’s Next

The IIJA, which authorized current federal highway and transit program spending, expires on September 30, 2026.12Federal Highway Administration. Infrastructure Investment and Jobs Act (IIJA) Congress will need to pass a new multi-year reauthorization to keep federal transportation funding at current levels. Without one, spending authority for highway and transit programs lapses.

Federal agencies have been studying a vehicle-miles-traveled (VMT) fee as a possible long-term replacement for the gas tax. The Federal Highway Administration has funded state pilots through Surface Transportation System Funding Alternatives grants, and the Government Accountability Office has recommended testing per-mile fees on commercial trucks and electric vehicles.13Federal Highway Administration. Vehicle-Miles Traveled (VMT) Fees No national per-mile fee has been enacted, but the 2026 reauthorization debate is expected to put it back on the table.