Fuel Tax Suspension and Credit Limits

Summary#

The bill changes the Internal Revenue Code to temporarily reduce a federal fuel excise tax when the national average price of gasoline is above $3.99 per gallon. For any month the national average gasoline price exceeds $3.99, the tax in section 4081 is reduced by 1 cent for each cent the price is above $3.99, but not below zero. The Treasury must transfer from the general fund to the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund amounts equal to those tax reductions.

The bill also removes certain tax benefits for oil and gas companies during those months. It disallows the intangible drilling costs rule for costs incurred in such months, disallows the enhanced oil recovery credit for costs paid or incurred in those months, and disallows the marginal well credit for production during those months. The changes apply to taxable years beginning after December 31, 2025.

What it means for you#

• If the national average gasoline price in a month is more than $3.99 per gallon, the specified federal excise tax on certain fuel is reduced by an amount equal to the price excess for that month.
• The bill directs transfers from the general fund to two trust funds (Highway Trust Fund and Leaking Underground Storage Tank Trust Fund) to make up for the reduced tax receipts.
• Certain tax deductions and credits for oil and gas companies are not allowed for months when the price test is met.

Expenses#

• The bill requires transfers from the general fund to the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund equal to the tax reductions under section 4081(f).
• No publicly available information on total budgetary cost, net revenue effects, or official estimates is included in the bill text.

Proponents' View#

No publicly available information in the bill text about proponents' stated reasons or arguments.

Opponents' View#

No publicly available information in the bill text about opponents' stated reasons or arguments.