Why the Federal Gas Tax Is Still 18.4 Cents Since 1993

The federal gas tax rate is 18.4 cents per gallon of gasoline, and it has been at that level since 1993. It is a flat amount added to every gallon sold in the United States, and the money flows mostly into the Highway Trust Fund, which pays for federal-aid roads and public transit.

A Fixed Amount, Not a Percentage of the Price

The federal gas tax does not work like sales tax. Sales tax is a percentage, so the government collects more when prices go up. The federal gas tax is a fixed 18.4 cents whether a gallon costs $2.00 or $5.00. Price spikes at the pump do not send extra money to Washington, and price drops do not shrink the tax either.

The rate is actually built from two pieces. The tax code sets a base rate of 18.3 cents per gallon and adds a 0.1-cent surcharge that funds cleanup of leaking underground storage tanks.¹ Together they produce the 18.4 cents that shows up on every gallon.

How the Rate Reached 18.4 Cents

Congress last raised the federal gasoline tax in the Omnibus Budget Reconciliation Act of 1993, signed on August 10 of that year, which pushed the rate from 14.1 cents to 18.4 cents.² That 4.3-cent bump was the last change. Every proposal since then to raise, lower, or index the rate has failed to become law, so a tax first written into the code more than three decades ago still sets the price today.

Rates for Other Fuels

Gasoline is not the only fuel taxed. The federal code sets separate rates for other motor fuels, all collected in the same framework:

Gasoline: 18.3 cents plus the 0.1-cent surcharge, or 18.4 cents total.¹
Diesel fuel and kerosene: 24.3 cents plus the 0.1-cent surcharge, or 24.4 cents total.¹
Propane (liquefied petroleum gas): 18.3 cents per energy-equivalent gallon of gasoline.³
Compressed natural gas: 18.3 cents per energy-equivalent gallon of gasoline.³
Liquefied natural gas: 24.3 cents per energy-equivalent gallon of diesel.³

The energy-equivalent gallon measure for alternative fuels means Congress pegged their rates to roughly the same energy content as conventional fuel. Like gasoline, every one of these rates is fixed by statute and does not move with market prices.

Who Pays It and When

You never write a check to the IRS for gas tax at the pump. The tax is collected upstream, at the terminal rack where fuel leaves a refinery or bulk storage facility. The companies removing the fuel at that point, known as position holders, owe the tax and report it on Form 720, the Quarterly Federal Excise Tax Return.⁴ By the time gasoline reaches the retail station, the tax is already built into the wholesale price you pay.

Collecting at a few hundred terminals is far easier than collecting from more than 100,000 gas stations, which is why the system is built this way.

Where the Money Goes

Every penny of the 18.4-cent tax has a designated destination:

Highway Account: 15.44 cents per gallon for federal-aid highways.
Mass Transit Account: 2.86 cents per gallon for public transportation.⁵
Leaking Underground Storage Tank Trust Fund: 0.1 cent per gallon for petroleum tank cleanup.¹

The Highway and Mass Transit accounts together make up the Highway Trust Fund. The three shares add exactly to 18.4 cents, and the split is fixed in law.

Why the Real Value Keeps Shrinking

Because the tax is a set number of cents rather than a percentage, inflation quietly cuts it every year. A dollar in 1993 bought considerably more asphalt, concrete, and steel than a dollar does today. By 2021 the tax had lost roughly 45 percent of its purchasing power, and had it been indexed to inflation from the start it would have needed to sit about 15 cents higher just to hold its 1993 value. Inflation since then has widened the gap further.

That erosion has real consequences for the Highway Trust Fund. Since 2008, fuel tax revenue has not been enough to cover the fund’s obligations, and Congress has repeatedly transferred money from the General Fund to keep it solvent. Between 2008 and 2021 those transfers totaled roughly $270 billion, with more since.⁶

The Infrastructure Investment and Jobs Act, signed in 2021, authorized federal highway and transit spending through September 30, 2026.⁷ The Congressional Budget Office projects that both the Highway Account and the Mass Transit Account could lack sufficient funds to meet federal obligations by fiscal year 2028, with an average shortfall of about $41 billion per year over the coming decade.⁸

State Taxes Sit on Top of the Federal Rate

The 18.4-cent federal tax is only one layer of what you pay per gallon. Every state adds its own gasoline tax or fee, and the national average for state-level taxes and fees runs about 33.3 cents per gallon.⁹ Some states charge under 10 cents; others exceed 50 cents. Some states also allow counties and cities to add their own per-gallon taxes. Combined federal, state, and local taxes can range from roughly 30 cents to over 70 cents per gallon depending on where you fill up.

When You Can Get the Federal Tax Back

Not every gallon is used on public roads, and the tax code accounts for that. Diesel fuel and kerosene meant for off-road or other nontaxable uses can be exempted at the terminal if the fuel is dyed with an approved color before it leaves.¹⁰ There is no dye system for gasoline, but you can claim a refund after the fact by filing Form 4136, Credit for Federal Tax Paid on Fuels, with your income tax return, if the gasoline was used for farming, off-highway business equipment, commercial fishing boats, or certain bus operations.¹¹ Personal driving and commuting do not qualify, and you will need records of what you bought, how many gallons, and how the fuel was used.¹²

What Could Replace the Gas Tax

The gas tax’s structural weakness is that it only works when people burn fuel. More efficient vehicles and a growing number of electric cars mean each mile driven yields less revenue. Electric vehicles made up about 1.2 percent of all light-duty vehicles on U.S. roads in 2023, a small share but a rising one, and every electric mile contributes nothing to the Highway Trust Fund.⁸

The most discussed alternative is a per-mile fee, sometimes called a vehicle-miles-traveled tax or road usage charge. The Infrastructure Investment and Jobs Act created a federal pilot program under Section 13002 to test the idea, though the advisory board attached to it has gone through starts and stops and remains more concept than reality.¹³ A growing number of states now charge electric vehicle owners an annual registration fee, typically $50 to nearly $300 per year, to make up some of the lost gas tax revenue, though these fees capture only a fraction of what a comparable gasoline vehicle would pay in fuel taxes. Until Congress raises the gas tax, indexes it to inflation, or replaces it with something new, the Highway Trust Fund will keep relying on General Fund transfers, and the September 30, 2026 authorization deadline puts the question on a short clock.⁷

1
Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
2
Congress.gov. H.R.2264 – Omnibus Budget Reconciliation Act of 1993
3
Office of the Law Revision Counsel. 26 USC 4041 – Imposition of Tax
4
Internal Revenue Service. Instructions for Form 720 – Quarterly Federal Excise Tax Return
5
Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund
6
U.S. Government Accountability Office. Highway Trust Fund: Federal Highway Administration Should Develop and Apply Criteria to Assess How Pilot Projects Could Inform Expanded Use of Mileage Fee Systems
7
Congress.gov. Transfers to the Highway Trust Fund
8
Congress.gov. Electric Vehicle Taxes and the Federal Highway Trust Fund
9
U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline
10
Office of the Law Revision Counsel. 26 USC 4082 – Exemptions for Diesel Fuel and Kerosene
11
Internal Revenue Service. Fuel Tax Credit
12
Internal Revenue Service. About Form 4136, Credit For Federal Tax Paid On Fuels
13
GSA FACA Database. Federal System Funding Alternatives Advisory Board