How to Solve a Highway Problem

With President Trump’s support, a federal gasoline tax suspension is a possibility.

Is that a good idea?

The Federal Gasoline Tax

The U.S. Highway Trust Fund (HTF) seems never to run out of money. The reason? Even if its spending exceeds its revenue, the general revenue funds from the U.S. government replenish it.

Since 2000, HTF spending has exceeded its revenue:

Like 2022, the gasoline excise tax remains the HTF’s major source of revenue:

With the Iran War elevating the price of gasoline, even slightly lowering it would help millions of people struggling with affordability. However, HTF needs revenue.

Our Bottom Line: Tax Philosophies

Philosophically, it made sense to use the gasoline tax for the Highway Trust fund. Representing a “benefits received” philosophy, a highway tax has drivers paying for their roads. The downside though takes us to another tax philosophy. If you believe that taxes should come from the affluent rather than those with smaller paychecks, that means a tax at the pump is not the answer. A gas tax is a regressive tax. As one amount for everyone, the less affluent pay a higher percent of their income than those earning more.

Still though, in a list of suggestions, the Tax Foundation includes tax hikes. One alternative suggests pairing a commercial traffic VMT (Vehicles Miles Traveled) with a higher gasoline tax and a fee for EVs. The new gasoline tax would be 24 cents. (If the 18.4 cent a gallon gas tax had been adjusted for inflation, today it would be an eye popping 43 cents a gallon–an extra $9 for a 20 gallon tank.)

Somewhat differently, one Congressman proposed offsetting the HTF revenue loss of suspending the federal gasoline tax with the oil and gas subsidies that were created by the 2025 tax bill.

Especially because the 5-year highway funding reauthorization is scheduled for September 2026, Congress has the opportunity to act. Should they suspend the gas tax?

My sources and more: In addition to the HTF website, a slew of articles, here and here, have looked at transportation funding. But the Tax Foundation is always the best for showing how the HTF could raise revenue. And finally, for more on the Highway Trust Fund, please take a look at this past econlife post.