The federal excise tax on gasoline is 18.4 cents per gallon

When you fill up at the pump, the federal government collects 18.4 cents per gallon in excise tax on gasoline. This is a flat rate set by federal law and does not change based on the price of oil or where you live. The tax has been at this rate since 1993.

This federal tax is separate from state and local gas taxes, which vary widely depending on where you are. Some states add as little as 8 cents per gallon; others add 50 cents or more. When you see the final price at the pump, you are paying federal tax, state tax, local tax (in some places), and the actual cost of the fuel itself.

Key Takeaways

  • The federal excise tax on gasoline is 18.4 cents per gallon and has not changed since 1993.
  • Diesel fuel carries a federal excise tax of 24.4 cents per gallon, which is 6 cents higher than gasoline.
  • State and local gas taxes are added on top of the federal tax and range from roughly 8 cents to over 50 cents per gallon depending on your state.
  • The federal gas tax funds the Highway Trust Fund, which pays for road maintenance and construction projects nationwide.

Where the federal gas tax goes

The 18.4 cents you pay per gallon goes into the Highway Trust Fund, a federal account that finances road repairs, highway construction, and public transit projects. The money does not go directly to your state; instead, the federal government collects it and distributes it back to states based on a formula that considers population, road miles, and other factors.

Your state then decides how to spend its share. Some of it goes to interstate highways, some to local roads, and some to transit systems. The amount your state receives depends partly on how much fuel is consumed there, so states with more driving get a larger share of the fund.

How federal tax compares to state and local taxes

The federal tax is only part of what you pay. Most states layer their own excise tax on top of the federal rate. For example, if you live in a state with a 30-cent state tax and you are in a county with a 5-cent local tax, your total tax per gallon would be 18.4 + 30 + 5 = 53.4 cents. The federal portion is always 18.4 cents, but the total tax burden varies dramatically by location.

A few states have no state gas tax at all, though this is rare. Alaska, for instance, has no state excise tax on fuel. Other states like California and Washington have among the highest combined state and local taxes in the nation. You can find your state's specific rate by checking your state's Department of Revenue or Department of Transportation website.

Why the federal tax has not changed since 1993

Congress set the federal gas tax at 18.4 cents per gallon in 1993 and has not raised it since. This means the tax is worth less in real dollars than it was 30 years ago because inflation has eroded its purchasing power. A cent in 1993 is worth roughly 2 cents in current dollars, so the tax's actual value has been cut in half.

The Highway Trust Fund has faced shortfalls in recent years because fuel consumption has not grown as fast as road maintenance costs have. Congress has had to transfer general tax revenue into the fund several times to keep it solvent. Some transportation experts argue the tax should be raised or indexed to inflation, but Congress has not done so.

Diesel fuel has a higher federal tax

If you drive a diesel vehicle, the federal excise tax is 24.4 cents per gallon, not 18.4 cents. This 6-cent difference has been in place since 1993 as well. Diesel fuel is taxed more heavily because diesel vehicles are typically heavier and cause more wear on roads, so the higher tax is meant to reflect that additional impact.

Like gasoline, diesel also carries state and local taxes on top of the federal rate. The same variation applies: your total diesel tax depends on where you live and pump fuel.

What happens to the tax money

The federal gas tax is collected by fuel distributors and refiners, who send it to the Internal Revenue Service. The IRS deposits it into the Highway Trust Fund, which is managed by the Department of Transportation. From there, the money is allocated to states and used for specific transportation projects.

The fund pays for highway maintenance, bridge repairs, road construction, and public transit systems. It does not pay for general government operations or other federal programs. The money stays within the transportation system, though how individual states choose to spend their share varies.

Frequently Asked Questions

Does the federal gas tax change with the price of oil?

No. The federal excise tax is a fixed 18.4 cents per gallon regardless of whether oil prices are high or low. When gas prices rise or fall at the pump, the federal tax stays the same—only the base fuel cost and state taxes change.

Why is diesel taxed more than gasoline?

Diesel vehicles are typically heavier trucks and commercial vehicles that cause more wear on roads. The higher 24.4-cent federal tax on diesel is meant to reflect that additional road damage. Heavy vehicles are responsible for a larger share of pavement deterioration, so they pay a proportionally higher tax.

Can I deduct the federal gas tax on my income taxes?

Most people cannot deduct the federal gas tax on personal income tax returns. However, if you are self-employed or run a business, you may be able to deduct fuel costs as a business expense. Consult a tax professional about your specific situation.

Does every state use the same federal tax rate?

Yes. The federal excise tax is the same everywhere in the United States—18.4 cents per gallon for gasoline and 24.4 cents for diesel. What changes by state is the additional state and local taxes layered on top of the federal rate.