Federal Gas Tax Holiday Not Picking up Speed Among Consumers

As we’ve touched on, while 39 percent of people told us a federal gas tax holiday would have a positive impact on their families, a similar percentage (36 percent) disagreed with that statement, while 26 percent were uncertain.

From a hard numbers standpoint, it’s easy to see why people wouldn’t see a huge upside to the gas tax holiday or would be uncertain about it. On a 16-gallon tank of gas at the national average of $4.88 per gallon, a driver would spend just over $78 to fill an empty tank. Removing the federal tax portion of that price would save just under three bucks.

However, Biden is also calling on states to consider suspending their gas taxes as well, including excise and sales taxes, or to hit pause on planned tax increases. This, too, would have a varying impact.

That’s because taxes and fees on gasoline vary from a high of nearly 67 cents per gallon in California to a low of about 15 cents per gallon in Alaska, according to a Tax Foundation analysis. We compared gas taxes and fees, including state and federal, to the average price of a gallon of gas today, according to AAA, and found that Pennsylvania drivers would see the biggest bang for the buck, with combined taxes and fees accounting for about 15 percent of a gallon of gas.

Federal and state gas tax holiday impact by state

SOURCES: Tax Foundation, AAA

The only age group where a majority of people said suspending the federal gas tax would positively impact their families were Generation Z, 51 percent of whom said a tax holiday would benefit them. Another 30 percent of this age group was undecided, also the highest number among any generational group.

On the other hand, 54 percent of Baby Boomers disagreed with the statement that suspending the tax would benefit their families and only 27 percent agreed. Indeed, support for the federal tax holiday fell and opposition rose with age.

Support/opposition for gas tax holiday by age group

Republicans and Democrats, unsurprisingly, hold opposing views, though even among Democrats, the federal gas tax holiday is not overwhelmingly popular. Fifty-four percent of Democrats agree that it would positively impact their families, compared to just 24 percent of Republicans.

As we speed toward the July Fourth holiday weekend and gas prices continue their rise, leaders and advocates across the political spectrum have offered a variety of solutions. Our analysis shows that most consumers remain unconvinced about the short-term fix of suspending the federal gas tax. But this issue varies considerably from state to state, as does the impact of taxes and fees at the pump.

We conducted an online survey of 991 U.S. adults about their views on President Joe Biden’s proposal to temporarily suspend federal tax on gasoline purchases. Our analysis of gas tax impact on prices uses data from the Tax Foundation and AAA; we calculated the per-state impact of federal taxes and state taxes and fees on the current (as of June 28) cost of a gallon of unleaded gasoline and the total resulting cost of a 16-gallon gas tank.