What does the federal gas tax go toward?

Summary

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Marketplace Morning Report

Episode Title: What does the federal gas tax go toward?
Date: May 13, 2026
Host: Sabri Ben-Achour
Reporter: Caitlin Tan
Guests/Attributions: Andy Winkler (Bipartisan Policy Center), Adam Hoffer (Tax Foundation), Rob Godby (University of Wyoming), Gracie Kelly (Kentucky League of Cities)

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Main Theme & Purpose

This episode explores the federal gas tax: what it is, why it's debated, and how the funds are actually used. Prompted by renewed discussion in Washington about potentially pausing the gas tax to provide relief at the pump, the episode clarifies the gas tax’s 90-year history, its role in infrastructure spending, and the challenges it faces in a changing automotive landscape.

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Key Discussion Points & Insights

1. History and Basics of the Federal Gas Tax

• The gas tax has existed for nearly a century (94 years).
  • "If you've ever driven to see the sunrise in the Grand Canyon or grizzly bear romp in Yellowstone, chances are the federal gas tax helped you get there." – Caitlin Tan (01:39)
• Intended for highways, bridges, and transit
  • Federal gas tax revenues fund a wide variety of transportation infrastructure projects across the country.
  • "The tax goes into all kinds of different projects around the country: highways, bridges, and even buses and light rail." – Caitlin Tan (02:02)
• Collected at the pump; the more you drive, the more tax you pay
  • Adam Hoffer explains the pay-per-use dynamic.
  • "If you drive more, you buy more gas, you pay more in tax." – Adam Hoffer (02:13)

2. Current Debates and Economic Realities

• Calls to pause the gas tax
  • President Trump and some Republicans propose a temporary pause; Democrats favor taxing oil companies and using rebates.
• Tax hasn't increased since 1993
  • Inflation and increased infrastructure costs have outpaced federal gas tax revenue.
  • "The gas tax is never going to win a popularity contest. Almost everyone dislikes gas taxes... but bad roads are unpopular too, which is related." – Adam Hoffer (02:26, 02:34)
• Revenue shortfall
  • Tax no longer covers the growing infrastructure needs.
  • "Really, in the past decade, the gas tax really hasn't kept up with the amount of federal expenditures on roads." – Adam Hoffer (02:38)

3. Structural Challenges

• Vehicle efficiency and electrification
  • As cars become more efficient and electric vehicles become common, less fuel is purchased and less tax collected.
  • "It's a challenge to tax those users because they don't use gasoline." – Caitlin Tan/Rob Godby (02:58–03:03)
• Potential financial impacts of suspension
  • Eliminating the tax for four months could mean $11 billion in lost revenue.
  • "If we were to eliminate the gas tax even for say four months, that could be an $11 billion revenue hit." – Rob Godby (03:03)

4. Real-World Projects

• Brent Spence Bridge Example
  • The gas tax helps finance significant projects like the new $4 billion bridge over the Ohio River, connecting Kentucky and Cincinnati.
  • "That's an example of what that federal gas tax goes towards." – Gracie Kelly (03:46)
• States experimenting with their own relief
  • Kentucky temporarily reduced its state gas tax by 10 cents.

5. Broader Economic Impacts (briefly)

• The episode briefly notes rising wholesale inflation, including but not limited to fuel.
• "Inflation from the perspective of wholesalers was up a massive 1.4% in just the month of April. Prices were up 6% year over year. These are the biggest jumps in four years." – Sabri Ben-Achour (04:01)

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Notable Quotes & Memorable Moments

• On the long history and reach of the gas tax:

  • "If you’ve ever driven to see the sunrise in the Grand Canyon or grizzly bear romp in Yellowstone, chances are the federal gas tax helped you get there." – Caitlin Tan (01:39)

• On the unpopularity and necessity:

  • "The gas tax is never going to win a popularity contest... but bad roads are unpopular too." – Adam Hoffer (02:26–02:34)

• On the growing shortfall versus demand:

  • "Really, in the past decade, the gas tax really hasn't kept up with the amount of federal expenditures on roads." – Adam Hoffer (02:38)
  • "As cars get more efficient and electrified, it's a challenge to tax those users, because they don't use gasoline." – Caitlin Tan / Rob Godby (02:58–03:03)

• On the potential impact of a pause:

  • "If we were to eliminate the gas tax even for say four months, that could be an $11 billion revenue hit." – Rob Godby (03:03)

• Local impact story:

  • "That's an example of what that federal gas tax goes towards." – Gracie Kelly, referencing the Brent Spence Bridge (03:46)

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Timestamps for Key Segments

• 01:10 – Episode introduction and framing of the policy debate
• 01:39 – History and uses of the federal gas tax
• 02:13 – Mechanics of tax collection; who pays
• 02:26 – Public perceptions and outdated tax rate
• 02:38 – Funding gap and economic pressures
• 02:58 – Challenges with electric vehicles and fuel efficiency
• 03:03 – Revenue loss estimates if tax suspended
• 03:26 – Infrastructure case study: the Brent Spence Bridge

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Conclusion

This concise segment demystifies the federal gas tax, highlighting its foundational role in funding America’s transportation infrastructure. The discussion lays out both the growing funding gap as vehicles evolve and the complex political calculus of tax relief proposals. The episode underscores the stakes: roads, bridges, and crucial connections across the nation may depend on an outdated, increasingly inadequate funding stream.

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Transcript

[Marketplace Morning Report Announcer]

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[Narrator/Reporter (possibly Kirk Carapeza)]

We've had

[Sabri Ben-Achour]

a gas tax for almost a century. What does it do? From Marketplace, I'm Sabri Ben Assure in New York. President Trump and some congressional Republicans want to temporarily pause the federal gas tax to help with costs at the pump. Democrats prefer to tax oil companies and pass that along as tax rebates. As that debate goes on, we thought it would be a good time to to take a closer look at the gas tax and how it shows up in our everyday lives. Marketplace's Caitlin Tan has that if you've

[Caitlin Tan]

ever driven to see the sunrise in the Grand Canyon or grizzly bear romp in Yellowstone, chances are the federal gas tax helped you get there.

[Narrator/Reporter (possibly Kirk Carapeza)]

So I think we've had a gas

[Caitlin Tan]

tax like nearly 90 years, 94 to be exact. That's Andy Winkler with the Bipartisan Policy Center. The the tax goes into all kinds

[Adam Hoffer]

of different projects around the country, highways,

[Caitlin Tan]

bridges, and even buses and light rail. But the tax collector for all those projects lives in your gas pump. Adam Hoffer is with the Tax Foundation.

[Adam Hoffer]

If you drive more, you buy more gas, you pay more in tax.

[Caitlin Tan]

Depending on the size of your car, it's about two bucks every time you fill up. The gas tax hasn't been boosted since 1993.

[Adam Hoffer]

The gas tax is never going to win a popularity contest. Almost everyone dislikes gas taxes, but bad

[Caitlin Tan]

roads are unpopular too, which Hoffer says is related.

[Adam Hoffer]

Really? In the past decade, the gas tax really hasn't kept up with the amount of federal expenditures on roads.

[Caitlin Tan]

A growing economy requires a lot of roads and bridges and upkeep to move those products. But you gotta pay for all that, and that's key. Getting a little hard. As cars get more efficient and electrified,

[Puerto Rico Economic Development Representative]

it's a challenge to tax those users

[Narrator/Reporter (possibly Kirk Carapeza)]

because they don't use gasoline.

[Caitlin Tan]

Rob Godby is a University of Wyoming economics professor. He says if we were to eliminate the gas tax even for say four months, that could be an $11 billion revenue hit.

[Narrator/Reporter (possibly Kirk Carapeza)]

It's probably borrowing more money and that's just worsening an already more significant problem in terms of government budget deficit.

[Caitlin Tan]

Borrowing money because those roadway projects have to happen. Projects like a new $4 billion bridge over the Ohio river and really that connects the Northern Kentucky region to Cincinnati. Gracie Kelly with the Kentucky League of Cities is talking about the Brent Spence Bridge. That's an example of what that federal

[Amanda Fernandez]

gas tax goes towards.

[Caitlin Tan]

On one side of that new bridge in Kentucky, the governor ordered up a 10 cent reduction in the state gas tax temporarily. I'm Caitlin Tan for marketplace inflation from

[Sabri Ben-Achour]

the perspective of wholesalers was up a massive 1.4% in just the month of April. Prices were up 6% year over year. These are the biggest jumps in four years. And it was not just gas and oil prices. A big piece of this was was in services.

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[Sabri Ben-Achour]

about to be a shortage of 18 year olds. It's demographics. The birth rate dropped around the time of the Great Recession and has not fully recovered. The this is a particular issue for colleges who will face a shrinking pool of applicants. But one population group eager to apply is still growing Latino students. From GBH in Boston, Kirk Carapeza reports.

[Narrator/Reporter (possibly Kirk Carapeza)]

The main administrative building on the former Pine Manor College campus sits on a hill in Brookline, Massachusetts. It's a 19th century shingle style mansion. Shuttles are running from here to Boston College. That's because in 2020 Boston College acquired Pine Manor and then four years later it launched a new school, Messina College, a residential two year junior college. Its stated mission serve low income first generation students.

[Father Eric Berryessa]

Pine Manor College was facing enrollment declines and the pandemic hit at that moment. And so I think BC saw an alignment of missions.

[Narrator/Reporter (possibly Kirk Carapeza)]

Father Eric Berryessa is a Jesuit priest and founding dean of Messina. He's the son of Mexican immigrants and a first generation college graduate.

[Father Eric Berryessa]

When I was a college student over 20 years ago now, we didn't have models like this. It was a sink or swim model. You just sort of had to figure it out or you didn't. You try to find a mentor or you didn't. And we want to take some of that guessing out of the equation.

[Narrator/Reporter (possibly Kirk Carapeza)]

Messina enrolls more than 200 students. About 40% are Latino, double the national average. The college offers students an associate's degree and a pathway to a bachelor's. Nationwide, according to federal data, about half of Latino students complete a degree within six years, compared with roughly 70% of white students.

[Amanda Fernandez]

That's been really consistent for many years.

[Narrator/Reporter (possibly Kirk Carapeza)]

Amanda Fernandez is the CEO of the nonprofit Latinos for Education. As the federal government caps international student enrollment, she says closing the Latino college completion gap is critical.

[Amanda Fernandez]

If Latinos are not also contributing to the economy, then it affects every person in the country.

[Narrator/Reporter (possibly Kirk Carapeza)]

Inside a lab at Messina College, students are checking their heart rates.

[Amanda Fernandez]

Is it on? Turn it on.

[Narrator/Reporter (possibly Kirk Carapeza)]

First year student Kaylee Castillo is the daughter of Dominican immigrants. She hopes to become a nurse and says financial aid drew her here.

[Amanda Fernandez]

I was kind of scared to go to college because I knew that like a lot of people come out with debt.

[Narrator/Reporter (possibly Kirk Carapeza)]

Castillo spends time on the main Boston College campus, but says she feels most at home here at Messina with fewer students.

[Amanda Fernandez]

If you're in the dining hall, it's not, you know, you're not, like, scrambling to find a seat. You can laugh a little louder here.

[Narrator/Reporter (possibly Kirk Carapeza)]

Messina's first class graduates in May, and 40 students have already been offered spots at Boston College to continue toward a bachelor's degree. In Boston, I'm Kirk Carapeza for Marketplace.

[Sabri Ben-Achour]

And in New York, I'm Sabri Benishore with the Marketplace morning report from apm. American Public Media.

[Adam Hoffer]

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