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How a federal gas tax holiday would work, and what you could save

Gas Tax Holiday
Posted at 4:49 PM, Jun 23, 2022
and last updated 2022-06-23 19:37:50-04

NASHVILLE, Tenn. (WTVF) — No matter what you drive or how far you have to go, we all seem to be gassed when it comes to high gas prices.

"It changes every day, it goes up 10, 15 cents every week it seems like," said Melissa Howe. "Who isn’t feeling the pain at the pump, right? Everybody."

The White House is proposing waiving the federal gas tax. If Congress passes the bill, from July to September, the 18-cent federal gas tax would be waived.

"I think it could be worth it for a lot of people. Because if you add that up every week, people who aren’t making a good income because of the economy, it’s really affecting them every month," said Howe.

But that seems to depend on who you ask.

"Not really me personally," said Jessica Stinson, another driver. "But I’m sure people who have those big trucks and stuff, it could probably help them a least a little bit."

That's because, even if you fill up 25 gallons of gas, forgiving the 18-cent-a-gallon federal gas tax only saves you about $4.50.

"Those taxes really make up a small portion of what you pay at the pump," said Megan Cooper, a spokesperson for AAA Tennessee.

NewsChannel 5 asked Cooper to break down what factors go into determining the price at the pump.

"You have the federal gas tax, you also have your state and local gas taxes, and you also have factors like the cost of crude oil, that actually accounts for a little over half of the price that you see at the pump. And then outside of that, you have marketing costs, distribution costs and then just local costs of simply running that business," said Cooper.

When you combine federal and state taxes, that's anywhere from 15 to 25% of the cost per gallon, which is why the White House is calling on each state to waive their state gas tax too.

However, Tennessee Governor Bill Lee has already said no — saying his administration decided to waive the state's grocery store tax during the month of August instead.

As for Melissa, she says she doesn't really care how the prices come down, as long as the pain starts to fade away.

"It’s getting to be a little bit ridiculous if I’m being honest," she said.

In order for this holiday to go into effect, it would have to be passed by both chambers of Congress. Funding for roads and bridges would still be allocated — just using different federal resources.