Trump Floats Federal Gas Tax Holiday Amid Iran War, Hawley Proposes 90-Day Suspension

President Donald Trump floated a federal gas tax holiday as gasoline prices rose amid the war with Iran, with the federal gasoline tax set at 18.4 cents per gallon and the federal diesel tax at 24.4 cents per gallon.

The Competitive Enterprise Institute said the national average price was $4.50 per gallon driven by the Iran conflict and argued a federal gas tax holiday would provide only modest short-term relief.

ABC News

AAA said May 7 the national average price for a gallon of regular gasoline had climbed to about $4.55, roughly $1.40 higher than a year earlier, after rising 25 cents for a second consecutive week.

Sen. Josh Hawley, R-Mo., introduced legislation May 11 that would suspend federal gasoline and diesel taxes for 90 days, with the president authorized to extend the suspension for another 90 days.

The ENR report also said the federal gasoline tax is unchanged since 1993 and is one of the primary revenue sources for the Highway Trust Fund, which finances federal highway and transit programs.

Opposition to Trump’s gas tax holiday plan came from trucking and construction groups that said the policy would weaken long-term Highway Trust Fund financing and deliver limited savings at the pump.

CNBC quoted Brian Turmail, national spokesman for the Associated General Contractors of America, saying, "A gas tax holiday is a good way to blow a hole in the collection of revenue for funding highway and transit repairs, but it's a bad way to help drivers who are affected by higher gas prices."

Bloomberg Government News

Transport Topics reported that major trucking groups said gas tax holidays deliver negligible benefit to consumers and warned that "Without replacement funds, fuel tax revenues supporting critical investments in highway safety and infrastructure projects would evaporate".

The ENR account added that the American Society of Civil Engineers said May 12 it "strongly opposes" proposals to suspend the federal gasoline tax, arguing the move would undermine transportation investment while offering no guarantee consumers would see meaningful savings at the pump.

ENR also cited the American Road & Transportation Builders Association saying it has "long opposed federal gas tax suspensions" due to their adverse impact on transportation investment and because they do not achieve the stated goal of reducing fuel prices.

In New Jersey, UTCA Chief Executive Officer David Rible urged the state’s congressional delegation to oppose a federal gas tax holiday, warning it could "potentially cripple the nation’s ability to fund critical infrastructure projects."

Insider NJ also said UTCA argued there was "little to no evidence that it would result in any meaningful benefit to Americans," and it warned the measure could trigger another "Gateway-style fight" that puts critical federal funding at risk.

In Ohio, WKBN reported that President Trump said, "Yea, I’m gonna reduce," and tied the timing to when the Iran situation ends, while AAA data put Northeast Ohio gas prices at approximately $4.80 to $4.95 per gallon of unleaded.

WKBN said Ohioans pay an additional 38.5 cents per gallon and 47 cents per gallon of diesel on top of the federal taxes, and it quoted Governor Mike DeWine warning that taking away those funds would leave the Ohio Department of Transportation "about 30% less effective".

The ENR report said the Bipartisan Policy Center estimated that a five-month suspension of federal gas and diesel taxes would reduce Highway Trust Fund revenue by about $17 billion, or roughly 46% of projected fiscal 2026 fuel-tax receipts, before accounting for replacement funding or other fiscal offsets.