President Trump and some lawmakers have floated a gas-tax holiday to relieve the pressure of rising fuel costs, but an economist says it wouldn't deliver much relief.
With fuel costs pushed higher by the Iran war, the White House has proposed curtailing the federal gas tax to help ease mounting prices at the pump. But Alex Brill of the American Enterprise Institute, a Washington DC economic policy think tank, says it wouldn't be an effective solution.
"There are significant concerns with this policy, including the possibility that the tax cut won't be passed forward to consumers, the potential negative impact on the federal Highway Trust Fund, and the overall fiscal impact.," he wrote in a post on the AEIeas blog.
A gas-tax holiday would temporarily reduce or suspend taxes on vehicle fuel, typically imposed to lower at-the-pump costs. Prices closed out May 2026 at their highest point in years, driven by the US-Iran war and the disruptions caused to oil flows through the Strait of Hormuz.
The former Capitol Hill economist said that the savings of a tax holiday would be minimal and uneven, and would vary by region and by state, allowing certain people to save much more than others.
"At most, drivers in North Dakota, Nebraska, and Kansas could have more than 25 percent of the additional cost offset, while drivers in Arizona and Alaska would see only 15 percent of their additional cost offset."
The best-case scenario would be if a gas-tax holiday is implemented and prices promptly fall, but according to Brill, that's likely an overly optimistic view.
He noted that if the current federal gas-tax of 18.4 cents per gallon is suspended nationwide, drivers wouldn't see the entire discount reflected in their savings. He cited a 2024 study that estimated that only 79% of the savings would be reflected in prices for consumers, as gas stations would absorb the rest.
"On net, a gas-tax holiday would have a limited and disparate impact on drivers while increasing the federal deficit by billions of dollars per month," he said. "It would provide only partial relief from higher fuel prices [and] do little to address the underlying cause of those prices."
Brill isn't the only economics pro to make argue against a gas-tax holiday. In April 2026, policy analysts from the Bipartisan Policy Center published a report with a similar analysis, noting it would extend minimal savings to drivers while ratcheting up the federal deficit.
