A Brief History of the Federal Gasoline Tax

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.

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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.

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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.

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.

McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.