Scrap The Gas Tax

The gas tax no longer matches the reality of the road. It is time to modernize how America funds infrastructure.

In the face of mounting gas prices, the Trump Administration has proposed a temporary suspension of the federal gas tax. The political appeal is obvious, providing folks with some relief at the pump. However, even a short-term suspension could have significant consequences for the already stressed Highway Trust Fund. Our aging infrastructure is in dire need of generational investment and cannot afford further delays. Even a one-day pause in the tax could result in $98 million a day in lost revenue.

However, it is right to question the efficacy of the gas tax for two major reasons: (1) The gas tax has failed to keep up with inflation, and (2) gasoline consumption no longer works as an effective proxy for miles traveled.

With the gas tax back in the public conversation, this is the perfect opportunity to replace it with a more dependable model to fund the next generation of American infrastructure. Most importantly is for policymakers to ask – and answer – what the purpose and scope of the Highway Trust Fund is today and how much the federal government should really do.

First, the gas tax has not been raised since 1993 and is costing the Highway Trust Fund tens of billions a year in lost potential revenue. Established in 1956 alongside the creation of the Interstate Highway System, the federal gas tax applies a per-gallon fee to gasoline and diesel purchases. Drivers pay for their direct usage of the roads. The federal gasoline tax currently sits at 18.4 cents per gallon and has remained unchanged since 1993. Properly adjusted for inflation, that tax would be roughly 37 cents per gallon today.

In 2024, the Highway Trust Fund reported $43 billion in revenue and a $26 billion operating deficit. Had the gas tax been indexed to inflation, the Highway Trust Fund could have generated nearly $50 billion in additional revenue last year alone. Over the last three decades, indexing the tax to inflation would have generated an estimated additional $500 billion for the Highway Trust Fund. For context, the American Society of Civil Engineers, the United States currently faces a roughly $435 billion backlog in road repairs alone.

Meanwhile, the cost of virtually every component of infrastructure construction — steel, concrete, labor, equipment, and financing — has risen dramatically over the same period. The purchasing power of the Highway Trust Fund has steadily eroded even as infrastructure demands continue to grow.

Second, advancements in vehicle technology have eroded the effectiveness of the gas tax itself. Modern cars and trucks are significantly more fuel efficient, allowing drivers to travel farther while contributing less. Electric vehicles complicate the math further. EVs still utilize the same roads, bridges, and public infrastructure but contribute little or nothing to the fuel-tax-based funding structure that supports them. Additionally, EVs are approximately 24% heavier on average than their internal combustion equivalents, placing additional wear and tear on roadways. Current proposals utilize a fee to offset the lack of gas tax use, but many consider this a nonstarter in a federal bill.

[1] The Gas Tax has failed to keep up with inflation leaving hundreds of billions of dollars lost revenue on the table.

Gasoline consumption no longer works as a proxy for miles traveled. As a result, the Highway Trust Fund has repeatedly relied on congressional transfers from the General Fund simply to maintain baseline transportation spending. Since 2008, Congress has transferred roughly $275 billion into the Highway Trust Fund to keep the system solvent. The Interstate system was designed as a self-sustaining user-funded model, yet it has increasingly operated more like a recurring subsidy.

At the end of the day, taxpayers are still paying to maintain these assets, but the burden is increasingly shared by everyone rather than the drivers who utilize the roads the most. More importantly, reliance on congressional appropriations denies DOT officials the consistency and predictability necessary to perform the long-term planning vital to infrastructure maintenance.

The Highway Trust Fund must evolve toward a framework not reliant on gallons of gas purchased and consumed. Several proposals have emerged to price the various modes of infrastructure consumption accordingly. Some states are piloting vehicle-miles-traveled programs that charge drivers based on actual roadway usage rather than fuel consumption. However, these systems carry significant privacy, administrative, and political baggage. Similarly, converting more roads to toll roads comes with substantial administrative and capital costs.

An alternative solution would be a flat annual vehicle fee collected through registration. While imperfect, this model would provide the Highway Trust Fund with far more dependable and predictable revenue streams while eliminating the need to calculate precise roadway usage.

Regardless of which framework ultimately emerges, the direction is clear. Transportation infrastructure can no longer be funded based simply on gasoline consumed. This issue has been punted down the road repeatedly since 1993, and policymakers must act before the financial strain on the Highway Trust Fund becomes irreversible.

The return of the gas tax to the national conversation should be viewed as an opportunity to finally modernize how America funds transportation infrastructure. The gas tax helped build the last century of American mobility, but it is unlikely to fund the next one. Now more than ever, it is time to replace the gas tax with a dependable funding structure capable of building the next generation of American infrastructure.

Written by Aaron Shavel, Policy Fellow

[1] Primary references:

• Federal Highway Administration Highway Trust Fund Data
• Tax Policy Center – Highway Trust Fund Overview
• S. Bureau of Labor Statistics CPI Inflation Calculator
• Congressional Budget Office Highway Trust Fund Projections