Trump Proposes Gas Tax Break, Risking $3 Billion Monthly Loss to Treasury

President Donald Trump has put forward a plan to suspend the federal gas tax, currently set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel, as a direct response to fuel costs that have surged over 50% since the Iran war began on February 28.

With average gas prices hitting $4.52 per gallon as of Sunday, per AAA data, the move aims to ease the burden on American consumers grappling with the fallout of geopolitical tensions.

A full-year suspension of the tax could slash federal revenues by $36 billion to $40 billion, based on recent figures from the Highway Trust Fund, which relies on these funds to maintain highways, bridges, and public transit systems. Even a shorter one month pause would cost the Treasury between $3 billion and $3.5 billion, a significant dent at a time when infrastructure needs are pressing.

Energy Secretary Chris Wright confirmed the administration’s openness to the idea during an appearance on NBC News’ ‘Meet the Press,’ though any suspension would require Congressional approval.

Trump himself endorsed the proposal with enthusiasm. ‘I think it’s a great idea. Yup, we’re going to take off the gas tax for a period of time, and when gas goes down, we’ll let it phase back in,’ the President said in a recent interview.

The spike in fuel costs ties directly to Iran’s blockade of the Strait of Hormuz, a critical chokepoint for global oil supply, as analysts have noted. This disruption has not only driven up gas prices but also sent jet fuel costs soaring, with prices more than doubling since the conflict’s onset. The impact is already visible in the airline sector—Spirit Airlines shuttered operations earlier this month under the weight of unsustainable fuel expenses, while analysts warn of rising ticket prices across the industry this summer.

Despite these pressures, Trump dismissed calls for a bailout of U.S. air carriers. ‘The airlines are doing not badly,’ he stated, signaling no immediate relief for an industry reeling from the crisis.

Adding to the uncertainty, Trump rejected Iran’s latest peace proposal as ‘totally unacceptable’ during a CBS News interview, dimming hopes for a quick resolution to the conflict driving oil market volatility. Meanwhile, several states, including Indiana, Kentucky, and Georgia, have taken matters into their own hands by cutting state-level gasoline taxes to offer some relief at the pump.

Democratic lawmakers in Congress have also floated bills to pause or reduce the federal gas tax, indicating potential bipartisan support for Trump’s plan. However, with the Highway Trust Fund’s annual budget at stake, the debate over balancing consumer relief against infrastructure funding is set to intensify in the coming weeks.

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