America's frozen 18-cent gas tax: why the Highway Trust Fund hits a wall in 2026

The statement that Americans pay roughly 18 cents per gallon in federal tax on gasoline and 24 cents per gallon on diesel is essentially correct — the precise rates are 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel, and they have been frozen in those exact nominal terms since Congress last raised them in 1993. That frozen-since-1993 levy is not a trivia fact. It is, in 2026, the single most consequential structural problem in United States transportation finance — and it is about to come to a head.

The Congressional Budget Office (CBO) projects that the Highway Trust Fund (HTF), the dedicated federal account that pays for the Interstate Highway System, federal-aid bridges, and the Mass Transit Account, will collect just $44.2 billion in highway revenue in 2026 against $61.4 billion of obligated highway spending — a $17.2 billion shortfall in a single fiscal year. The current authorisation under the Infrastructure Investment and Jobs Act (IIJA, 2021) — the "Bipartisan Infrastructure Law" signed by President Joe Biden in November 2021 — expires on September 30, 2026. Congress therefore faces a hard reauthorisation deadline in roughly 20 weeks, against an underlying structural deficit that grows by inflation every year nothing changes.

What the 18.4 / 24.4 numbers actually fund

The federal motor-fuel excise tax has a specific allocation, confirmed by the Federal Highway Administration (FHWA) and the canonical US Energy Information Administration (EIA) FAQ:

• 18.4 cents/gallon on gasoline.
• 24.4 cents/gallon on diesel.
• 18.3 cents of each gasoline cent and 24.3 cents of each diesel cent flow into the Highway Trust Fund; the remaining 0.1 cents funds the Leaking Underground Storage Tank (LUST) Trust Fund.
• Within the HTF, revenue is split between the Highway Account (the majority) and the Mass Transit Account.
• Motor-fuel taxes account for approximately 91% of Highway Trust Fund revenue. Almost everything you see signposted on an interstate — repaving, bridge rehab, signage, federal-aid road construction — is built and maintained from this account.

State-level taxes are separate and substantial. Per EIA, the United States national average gas tax including state and federal layers sits in the 50-70 cents per gallon range, varying significantly by state — California is at the high end (above 60¢ of state-level tax alone), Alaska at the low end (around 9¢ of state tax). The conversation in this piece is specifically about the federal layer.

Why the tax stops working in 2026

The 18.4 / 24.4 rates are specific, not ad valorem — they are flat cents-per-gallon figures, not percentages of price. That is the root structural problem. Per the Tax Foundation's 2026 policy brief and analysis tracked by Streetsblog USA:

1. Inflation has eaten the tax. The federal gas tax has lost approximately 73% of its 1993 purchasing power to cumulative inflation. A 18.4¢ rate from 1993 would need to be around 40¢ today to maintain real-terms revenue per gallon.

2. Construction costs have risen faster than general CPI. This is the part most journalism gets wrong by attributing the gap to electric vehicles. Consumer Reports analysis cited by Streetsblog USA finds that 77% of the gas tax's lost real value comes from construction-cost inflation — the price of paving, steel, concrete, labour and engineering — not from EVs or fuel-efficiency gains.

3. Fuel economy has roughly doubled. Average new-vehicle fuel economy rose from 13.1 mpg in 1975 to 27.1 mpg in 2023. A driver covering the same number of miles in 2026 pays roughly half the federal gas tax that a comparable driver paid 40 years ago, even before any inflation adjustment.

4. Electric vehicles pay nothing. Per CRS analysis, EVs make up around 1.2% of the US light-duty vehicle stock as of 2025-2026, and pay zero federal motor-fuel tax by definition. The share is small today but growing fast, and even a modest EV-adoption acceleration accelerates HTF revenue decline.

5. Heavy trucks are systematically undercharged. Engineering studies estimate that an 80,000-pound five-axle commercial truck imposes between 300 and 9,600 times more pavement damage per vehicle-mile than a 4,000-pound passenger car. Commercial trucks currently pay around 4 cents per mile in fuel taxes plus modest tire excise and heavy-vehicle use fees — well below the marginal cost they impose. Passenger drivers are, in effect, subsidising freight road damage through general-fund transfers.

The reauthorisation forcing function

The September 30, 2026 expiration of the IIJA is the legislative deadline that turns a slow-moving structural problem into a near-term political fight. Congress must, by that date, pass a new surface-transportation authorisation — typically a five-year bill. The vehicle for that legislation is the House Transportation and Infrastructure Committee (chair: Rep. Sam Graves, R-MO; ranking member: Rep. Rick Larsen, D-WA) and the Senate Environment and Public Works Committee (chair: Sen. Shelley Moore Capito, R-WV; ranking member: Sen. Sheldon Whitehouse, D-RI), with Senate Finance and House Ways and Means jurisdiction over the revenue side.

Newsorga's read on the political architecture: the historical playbook — used most recently in IIJA itself — is to avoid the tax fight entirely by transferring general-fund money into the HTF. Congress has done this continuously for nearly 20 years. The HTF has not been self-sustaining on user-pays terms since roughly 2008. The IIJA alone authorised approximately $118 billion in general-fund transfers over five years to plug the gap.

The reason this year is different — and why the Eno Center for Transportation has titled its policy report "The Last Exit" — is that the post-COVID general-fund deficit position is meaningfully tighter, the CBO is projecting highway-account insolvency by FY2028 even with continued transfers, and the EV share is now visibly large enough that pretending the gas tax can be the long-term funding mechanism is harder to defend on any committee record.

The four reform options now on the table

Based on the Tax Foundation's technical menu and the Eno Center's scoring, there are four serious options being modelled:

Option A: Full vehicle-miles-traveled (VMT) tax. A per-mile fee that scales by gross vehicle weight rating and replaces both the gasoline and diesel taxes entirely. The Tax Foundation's modelled rate schedule produces approximately 0.66 cents/mile for a small passenger sedan, 0.89 cents/mile for an average passenger car, and 10.4 cents/mile for commercial trucks. Over 10 years (2026-2035), the full VMT model raises $270 billion in HTF revenue and reduces overall federal deficits by $206 billion after standard income/payroll-tax offsets. This is the technocratically preferred option — it solves the freight-subsidy problem, eliminates the EV hole, and indexes for inflation. Politically, it is the hardest sell because it requires either GPS-based mileage tracking, odometer reporting at registration, or a hybrid scheme — all of which face privacy opposition from across the political spectrum.

Option B: Truck VMT + EV fee + small gas-tax hike. A commercial-only VMT tax (Oregon-style, matching the Oregon Department of Transportation programme that has been running since 2015 and is the only large-scale US precedent), a $100 annual flat fee on passenger EVs, and a modest gas-tax increase from 18.4¢ to 20.4¢ per gallon (a 2¢ bump). All three components inflation-indexed. Politically more viable than Option A because passenger drivers see only a minimal change.

Option C: Gas tax increase + EV fee, no VMT. The simplest legislative path. The Eno Center has scored a 10 cent immediate gas-tax increase plus gradual adjustments totalling 17.8 cents/gallon by 2036 as one of the cleanest ways to close the 2026 gap. Pair with a flat EV fee, and this is the path of least administrative complexity. Hard politically because raising the gas tax has been radioactive in US federal politics for 33 years.

Option D: Universal annual vehicle registration fee. A $120 flat annual fee on every registered vehicle in the US, regardless of fuel type or miles driven. Closes the gap in revenue terms. Politically clean because it bypasses the gas-pump symbolism. Distributionally regressive because the fee is identical for an Atlanta retiree driving 3,000 miles a year and a Texas commuter driving 30,000.

Why most proposals will probably fail (and what likely happens instead)

Newsorga's realistic political read on the September 30 reauthorisation deadline, based on prior surface-transportation cycles:

• A full VMT tax (Option A) is highly unlikely to pass in 2026. It is the right policy but the wrong political moment — privacy concerns, administrative complexity, and the absence of a clean federal precedent (Oregon's programme is the only US large-scale example) make it a multi-decade reform horizon, not a 2026 floor vote.
• A gas-tax increase (Option C) is also highly unlikely to pass in standalone form. The last federal gas-tax increase was in 1993 under President Bill Clinton's Omnibus Budget Reconciliation Act, and no President of either party has been willing to spend political capital on it since.
• An EV fee of $100-200 annually is the most likely standalone reform to actually pass, because both parties have a constituency for it: Republicans see EV-favouritism in current policy, Democrats see EV-mainstreaming as a positive. Newsorga expects this to be in the final bill text.
• A commercial-truck VMT pilot programme expansion is also likely — it preserves the Oregon model, is bipartisan, and doesn't touch passenger-driver politics.
• The base case for the headline funding gap is another general-fund transfer, in the $100-150 billion range over the five-year authorisation, paired with the EV fee and a commercial-truck VMT pilot. This is not a structural solution. It buys five more years. It is, almost certainly, what Congress does.

The other half: state taxes

Federal taxes are a third or less of what most US drivers actually pay at the pump in motor-fuel taxes. State-level rates, per EIA, vary wildly:

• California: roughly 60 cents/gallon of state tax alone — among the highest in the country, driven by the Low Carbon Fuel Standard and cap-and-trade allowance costs that pass through to retail fuel prices.
• Pennsylvania: around 58 cents/gallon of state tax.
• Washington State: around 49 cents/gallon of state tax.
• Alaska: around 9 cents/gallon of state tax — the lowest of any state.
• National average state-level tax: roughly 30 cents/gallon.

Adding the federal 18.4¢ to a typical state's 30¢ brings the all-in motor-fuel tax to roughly 48-50 cents/gallon for a typical US driver, with high-tax states pushing 75-80 cents/gallon. The headline 18-cent figure that triggered this piece is a real but small slice of total pump-level taxation.

The five things to watch through September 30

Newsorga is tracking five concrete data points through the 2026 reauthorisation cycle:

1. The CBO baseline. The Congressional Budget Office will publish an updated HTF baseline for FY 2027-2031 ahead of the House T&I markup. The baseline shortfall number — currently $17.2 billion for 2026 — sets the political ceiling on what reformers can claim needs to be raised.

2. The House T&I draft. Chairman Graves and Ranking Member Larsen will release a draft surface-transportation reauthorisation bill, expected before the August recess. The draft will signal whether VMT pilots, EV fees, or gas-tax adjustments are on the table at the House level. Newsorga expects the EV fee but no gas-tax increase.

3. The Senate EPW counter. Chair Capito has historically favoured highway-user fees and pavement-condition formula adjustments over revenue increases. The Senate EPW draft will likely lean harder on truck-weight-distance reforms than on passenger-driver changes.

4. The Oregon precedent. Oregon's legislature passed a transportation bill in September 2025 that would reform its VMT structure, including refinements to its commercial-truck weight-mile tax. If the governor signs, Oregon becomes a more replicable federal pilot — and the Congressional Research Service will likely produce a comparative report by mid-2026.

5. The White House posture. President Donald Trump's administration has not yet signalled its preferred reauthorisation framework. Historically, Trump has supported infrastructure spending but has been hostile to gas-tax increases. The most likely White House position is a continued general-fund transfer combined with an EV registration fee as a "fairness" talking point — almost exactly the political path of least resistance described above.

Bottom line. Yes — Americans pay roughly 18 cents per gallon of federal tax on gasoline and 24 cents per gallon on diesel. Those numbers are real, frozen since 1993, and structurally insufficient to fund the highway system Congress has obligated. September 30, 2026 is when the legislative architecture forces a decision. The political prediction is that Congress patches rather than reforms — but the underlying solvency math means the patch only buys time until the next reauthorisation cycle in 2031.