Written by: Robert Mandeville, Director, Fuel & Excise Tax Practice Lead
Recent increases in oil and gasoline prices have prompted lawmakers at both the federal and state levels to introduce legislation that would temporarily suspend certain fuel taxes. While none of the proposals have been enacted to date, companies involved in the production, distribution, or sale of motor fuel should be aware of the potential impact these measures could have on excise tax reporting and compliance obligations.
Federal Legislation Would Suspend Gasoline Excise Tax
U.S. Senators Mark Kelly (D-AZ) and Richard Blumenthal (D-CT) have introduced the Gas Prices Relief Act of 2026, which would temporarily suspend the federal excise tax on gasoline through October 1, 2026. The proposal would eliminate the current federal gasoline tax of $0.183 per gallon, as well as the $0.001 per gallon Leaking Underground Storage Tank (LUST) tax, for the duration of the suspension period. Democratic Representative Chris Pappas of New Hampshire has introduced the Gas Prices Relief Act of 2026 in the House, a bill that would suspend the federal gasoline tax through October 1.
The bill has been introduced but has not advanced through Congress, and no suspension of the federal gasoline tax is currently in effect. The House version has been introduced and referred to the House Ways and Means Committee.
States Considering Similar Fuel Tax Relief
In addition to the federal proposal, several states have discussed temporary gas tax holidays in response to recent price increases.
In Connecticut:
Governor Ned Lamont has proposed suspending the state’s 25-cent-per-gallon gasoline tax. The proposal would require legislative approval before it could take effect, and no suspension has been enacted at this time.
In Pennsylvania:
Legislation has been discussed that would temporarily suspend state gasoline and diesel taxes for a limited period. As of now, no bill has been passed.
Additional states may consider similar measures if fuel prices remain elevated, as temporary fuel tax suspensions have been proposed in prior periods of price volatility.
Compliance Considerations if Enacted
Temporary fuel tax suspensions can create administrative and compliance challenges for companies responsible for collecting, reporting, or remitting fuel excise taxes. Changes to tax rates, effective dates, and reporting requirements may require updates to billing systems, tax engines, and return preparation processes on short notice.
Companies should monitor these proposals closely and be prepared to evaluate the impact on their fuel tax reporting, exemption handling, and transaction data if any of the proposed suspensions are enacted.
DMA will continue to monitor federal and state developments related to fuel excise taxes and will provide updates as additional information becomes available.
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