Trump eyes major action on federal gas tax as prices remain elevated ahead of midterms

WASHINGTON, DC: President Donald Trump on Tuesday, October 6, said that his administration was considering suspending the federal gasoline tax as elevated fuel prices continued to weigh on Americans ahead of the upcoming 2026 November midterm elections.

The president raised the possibility while speaking to reporters at the White House, stating that his administration was “thinking about" suspending the federal gasoline tax. However, he did not provide details on how or when such a measure could be implemented. 

Federal gas tax suspension would require Congress

The federal government currently charges 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. The gasoline tax generates more than $23 billion annually for highways and public transit.

Trump first raised the idea of suspending the federal gasoline tax in May, after fuel prices rose sharply as the US-Israeli strikes on Iran affected energy markets. Gasoline prices have remained significantly higher than a year ago. As of Tuesday, the AAA data put the national average for regular gasoline at $4.3685 a gallon, compared with $3.13 a year earlier.

Diesel prices have also increased substantially. AAA reported an average of $6.32 a gallon, down from a record $6.53 on September 22 but still nearly double the $3.68 average recorded a year ago. The higher diesel costs have increased expenses for trucking and other industries that rely heavily on the fuel.

The proposal comes as the administration has taken other steps aimed at reducing fuel costs. Just a day before his latest announcement, Trump on Monday, October 5, signed an executive order expanding access to tax-exempt “red dye” diesel, which is generally used for agricultural and off-road purposes.

The order directs the Treasury secretary, in consultation with the Pentagon chief, to defer payment of the federal excise tax on dyed diesel used for on-road purposes through the end of the year. It also directs federal agencies to examine ways to eliminate the deferred tax obligation.

Trump had introduced the measure at a rally in Nebraska and said that hopefully, “we are not going to need it (waiver) long, I hope.” However, suspending the federal gasoline tax would require Congress to approve legislation, meaning it is not an action that Trump could take alone.

States cut fuel taxes as Republicans face midterm pressure

Several states have also separately taken action to lower fuel costs. Ohio Republican Governor Mike DeWine signed legislation waiving the state's 38.5-cent gasoline tax and 47-cent diesel tax through December 31. Utah Republican Governor Spencer Cox reduced the state's fuel levies by 6 cents through the end of the year.

Georgia Republican Governor Brian Kemp suspended the state's 33.3-cent gasoline tax and 37.3-cent diesel tax through at least October 29. Indiana Republican Governor Mike Braun suspended a 7% gasoline use tax and a 37-cent excise tax, while keeping a separate 63-cent-per-gallon diesel tax in place. Kentucky Democratic Governor Andy Beshear paused automatic inflation adjustments to fuel taxes.

The president on Monday also argued that fuel prices were already declining. “Gasoline prices are now coming way down,” he said, adding that oil prices would fall further “drop like a rock" soon "as the war is over.”