spending

A Brief History of the Federal Gasoline Tax

The government has been taxing our fuel for over 80 years—and right from the get-go, the money was going to things other than roads and bridges.

As Congress considers raising the federal tax on gasoline for the first time since 1993, consider highlights from a history of the tax prepared by the Congressional Research Service (CRS). In 1911, just three years after the Model T was introduced, Oregon became the first state to tax motor fuels. By 1932, every state and the District of Columbia had followed suit. And in 1932, the feds got in on the act.

1932

A temporary 1-cent-a-gallon federal tax is imposed. It is not dedicated to building roads but rather to deficit reduction in the midst of the Great Depression. It is scheduled to expire in 1934.

1933

Congress votes to extend the tax and increase the rate to 1.5 cents a gallon.

1934

When Prohibition ends (so the feds can again tax booze), the gas tax falls back to 1 cent a gallon, where it stays until 1940.

1940

In anticipation of World War II, the tax rate is hiked to 1.5 cents a gallon through June 1945. Later, it is made permanent at that level.

1951

To help pay for the Korean War, Congress boosts the gas tax to 2 cents a gallon.

The Hövding in action

Courtesy Ford Motor Company

1956

Congress creates the Highway Trust Fund, increases the federal gas tax to 3 cents a gallon and dedicates 100% of the revenue to the Trust Fund to help pay for the interstate highway system.

1959

Congress pushes the tax to 4 cents a gallon.

1983

Lawmakers add a nickel a gallon, setting the rate at 9 cents a gallon, with 1 cent dedicated to mass transit projects.

1990

An additional 5 cents a gallon is added, bringing the tax to 14 cents a gallon. Half of the increase is dedicated to highways, the other 2.5 cents aimed at deficit reduction (the same goal as the original tax in 1932).

1993

Congress adds 4.3 cents a gallon to the gasoline tax, with the added revenue dedicated to deficit reduction. With the addition of the 0.1-cent-a-gallon levy to fund the leaking underground storage tank trust fund the federal tax rose to 18.4 cents a gallon. That’s where it stands today. Since 1997, the full federal gasoline tax has gone to the Highway Trust Fund.

Most Popular

Refunds for $10,200 Unemployment Tax Break to Begin This Week
Coronavirus and Your Money

Refunds for $10,200 Unemployment Tax Break to Begin This Week

The IRS will start issuing automatic refunds in mid-May to people eligible for the unemployment benefit tax exemption.
May 14, 2021
Thinking of Buying an RV or Motor Home? Think Again!
personal finance

Thinking of Buying an RV or Motor Home? Think Again!

A Lemon Law attorney has some insights on the downsides of RV ownership you should think about before putting your money down and hitting the road.
May 16, 2021
Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs
Coronavirus and Your Money

Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs

People have lots of questions about the new $3,000 or $3,600 child tax credit and the advance payments that the IRS will send to most families in 2021…
May 17, 2021

Recommended

18 Worst Things to Buy at Dollar Stores
spending

18 Worst Things to Buy at Dollar Stores

These discount retailers stock plenty of bargains, but some of the merchandise isn’t worth the buck.
May 14, 2021
8 Money-Smart Ways to Spend Your Tax Refund
Tax Breaks

8 Money-Smart Ways to Spend Your Tax Refund

Since this year's tax deadline was pushed back to May 17, many people are just now filing their tax return. That means there are a lot of tax refunds …
May 10, 2021
11 Places That Will Pay You to Live There
real estate

11 Places That Will Pay You to Live There

Working remotely? You may want to check out these places that'll pay you to move there.
April 23, 2021
What You Need to Know about College 529 Savings Plans
529 Plans

What You Need to Know about College 529 Savings Plans

Do you know how much you’re able to contribute or what the funds could be used to pay for? How about how contributing affects your taxes? Check out th…
April 14, 2021