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How Much is the Federal Gas Tax Today?

The federal gas tax is a tax that the U.S. government imposes on gasoline and diesel fuel. It is a tax that drivers pay when they fill up their vehicles with fuel. The tax revenue is used to fund transportation projects such as building and maintaining highways, bridges, and other transportation infrastructure.

The federal gas tax is currently set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. This tax has remained unchanged since 1993, despite inflation and the increase in fuel efficiency of modern vehicles. As a result, the purchasing power of the gas tax has decreased over time. In 2019, the federal gas tax generated roughly $38 billion in revenue, which was used to fund transportation projects across the country.

The federal gas tax was first introduced in 1932 as a way to fund the construction of highways and other transportation infrastructure. The tax was initially set at 1 cent per gallon of gasoline and was increased over time to support the expansion of the federal highway system.

Today, the federal gas tax is the primary source of funding for the Highway Trust Fund, which supports transportation projects across the country. The tax revenue is used to fund projects such as building and maintaining highways, bridges, and other transportation infrastructure. The funds are also used to support public transportation projects, including buses, subways, and commuter rail systems.

Despite its importance in funding transportation infrastructure, the federal gas tax has been a topic of controversy in recent years. The tax has not been raised since 1993, and as a result, its purchasing power has decreased over time. Many policymakers have called for an increase in the gas tax to fund infrastructure projects, while others have suggested alternative funding sources, such as tolls or vehicle-miles-traveled fees.

The History of the Federal Gas Tax

The federal gas tax has a long history that dates back to the early days of the automobile. In the 1920s, as the popularity of cars grew, the government began to recognize the need for a dedicated source of funding for transportation infrastructure. In 1932, the federal government introduced the first gas tax of 1 cent per gallon, which was used to fund the construction of highways and other transportation projects.

Over the years, the gas tax has been adjusted several times to reflect changes in the economy and transportation needs. In 1956, the gas tax was increased to 3 cents per gallon to fund the construction of the Interstate Highway System. Since then, the tax has been increased several times, with the most recent increase occurring in 1993. Despite the increases, the purchasing power of the gas tax has decreased over time due to inflation and the increase in fuel efficiency of modern vehicles.

How is the Federal Gas Tax Collected and Used?

The federal gas tax is collected by the Internal Revenue Service (IRS) and is included in the price of gasoline and diesel fuel. Gas stations collect the tax from customers when they purchase fuel and then remit it to the government. The tax revenue is deposited into the Highway Trust Fund, which is used to fund transportation projects across the country.

The funds from the gas tax are distributed to states based on a formula that takes into account the state’s population and the number of miles of highway in the state. States can use the funds to support a variety of transportation projects, including highway construction and maintenance, bridge repairs, and public transportation projects.

Despite the importance of the gas tax in funding transportation infrastructure, there have been concerns about its long-term sustainability. The purchasing power of the tax has decreased over time, and as vehicles become more fuel-efficient or transition to electric power, the amount of revenue generated by the gas tax is likely to decline. As a result, policymakers have been exploring alternative funding sources, such as tolls or vehicle-miles-traveled fees, to supplement or replace the gas tax.

How is the Federal Gas Tax Collected and Used?

The federal gas tax is collected by the Internal Revenue Service (IRS) through a system of excise taxes. This tax is imposed on the first sale of gasoline or diesel fuel by the producer or importer. The tax is then passed on to the fuel distributors, who pass it on to retailers, and eventually, to consumers. The tax is included in the price of gasoline and diesel fuel at the pump.

The funds generated from the federal gas tax are deposited into the Highway Trust Fund, which is used to fund transportation projects across the country. The fund is divided into two accounts: the Highway Account and the Mass Transit Account. The Highway Account is used to fund highway and bridge projects, while the Mass Transit Account is used to support public transportation projects such as buses, subways, and commuter rail systems.

The funds generated from the federal gas tax are also used to support other transportation-related programs, including the Federal Transit Administration, the National Highway Traffic Safety Administration, and the Federal Motor Carrier Safety Administration.

Conclusion

In conclusion, the federal gas tax is a tax that the U.S. government imposes on gasoline and diesel fuel. It is currently set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. The tax revenue is used to fund transportation projects such as building and maintaining highways, bridges, and other transportation infrastructure.

Despite its importance in funding transportation infrastructure, the federal gas tax has not been raised since 1993, and its purchasing power has decreased over time. Many policymakers have called for an increase in the gas tax to fund infrastructure projects, while others have suggested alternative funding sources, such as tolls or vehicle-miles-traveled fees.

Overall, the federal gas tax plays a critical role in funding transportation infrastructure in the United States. As drivers continue to rely on gasoline and diesel fuel to power their vehicles, the gas tax will remain an essential source of funding for transportation projects across the country.

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