Under current law, the tax rate is 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel. A 0.1 cents per gallon tax is also levied on top of these fuel tax rates to help fund expenses associated with fuel regulation. These rates do not automatically adjust for inflation. Specific tax rates also apply to special motor fuels, such as kerosene, compressed natural gas, and fuels derived from biomass. Under current law, federal motor fuels excise tax collections are credited to two federal spending accounts: the Highway Trust Fund (HTF) and the Leaking Underground Storage Tank (LUST) Trust Fund. Future declines in tax collections are projected largely due to scheduled increases in corporate average fuel economy (CAFE) standards . Since 2008, Congress has prevented projected shortfalls in the HTF by transferring money from the Treasury's general fund and the LUST Trust Fund to the HTF. This report provides an overview of current law and a legislative history of the federal motor fuels excise tax and financing of the HTF. Specifically, this report analyzes tax collections from gasoline and diesel motor fuels for highway use, since they have historically composed approximately 90% of the source of funding for the HTF. The report also includes a summary of the history of the gas tax and funding for the HTF in past sessions of Congress. Issues related to Federal Highway Trust Fund spending programs and infrastructure financing more broadly are beyond the scope of this report. Current and Historical Motor Fuel Excise Tax Rates

		Federal Tax Rates

Federal tax rates on motor fuels used for transportation purposes are summarized in Table 1 . Under H.R. In addition, H.R. 114-41 also transferred $8.068 billion from the general fund to the HTF. FAST Act (Five-Year Authorization)

On December 4, 2015, President Obama signed the Fixing America's Surface Transportation (FAST) Act ( P.L. 114-94 ). The FAST Act authorizes federal highway and public transportation programs for five years (FY2016-FY2020). In order to fund the spending levels in the FAST Act, the law authorizes a $70 billion transfer from the general fund to the HTF (offset by the provisions in Table 4 ) and $300 million in scheduled transfers from the LUST Fund (spread out over three, subsequent annual payments of $100 million beginning immediately in FY2016) to supplement projected HTF revenues. The FAST Act also reauthorized current law tax rates for motor fuels and the LUST Fund tax through FY2022. H.R. 2971 . Under the bill introduced in the 114 th Congress, federal motor fuel taxes would be phased down from the current rates of 18.3 cents per gallon of gasoline and 24.3 per gallon of diesel fuel to 3.7 cents per gallon and 5.0 cents gallon, respectively, over the 2018-2021 period. CRS Report R42877, Funding and Financing Highways and Public Transportation , by [author name scrubbed] and [author name scrubbed], discusses several of these options and other approaches that could be used in various combinations to reform HTF funding, such as the following:
Indexing existing fuel taxes to some measure of inflation. History of the Federal Motors Fuels Excise Tax and the Highway Trust Fund

Gasoline Excise Tax for Deficit Reduction—1932
Although excise taxes have long been a source of federal tax revenue, the federal manufacturers excise tax on gasoline was first incorporated into the federal tax structure by the Revenue Act of 1932, which became law on June 6, 1932.
The federal government levies an excise tax on various motor fuels. Under current law, the tax rate is 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel. A 0.1 cents per gallon tax is also levied on top of these fuel tax rates to help fund expenses associated with fuel regulation. These rates are not automatically adjusted for inflation. Specific tax rates also apply to special motor fuels. Under current law, federal motor fuels excise tax collections are credited to two federal spending accounts: the Highway Trust Fund (HTF) and the Leaking Underground Storage Tank (LUST) Trust Fund.
On December 4, 2015, President Obama signed the Fixing America's Surface Transportation (FAST) Act (P.L. 114-94). The FAST Act reauthorized federal highway and public transportation programs for five years (FY2016-FY2020) and reauthorized current gas tax and LUST tax levels through FY2022. Spending levels in the FAST Act are funded by HTF revenues and a $70 billion transfer from the general fund to the HTF and $300 million in scheduled transfers from the LUST Fund. The transfers from the general fund were offset by non-transportation-related provisions.
A major policy debate surrounding the motor fuels excise tax relates to the ability of the HTF to be self-sustaining. Approximately 90% of HTF receipts are composed of annual tax collections on gasoline and diesel fuels. Since 2008, HTF spending obligations have exceeded receipts and $139.9 billion (after sequestration) has been transferred from the Treasury's general fund (as well as $3.7 billion from the LUST Trust Fund) to address these projected shortfalls. Tax collections have declined over time because of inflation's effect on the value of the tax rates, among other factors. Future declines in tax collections are anticipated because of scheduled increases in corporate average fuel economy (CAFE) standards.
Although left unaddressed by the FAST Act, federal motor fuels excise tax rates could be a major subject of debate as Congress considers longer-term sources of funding for the HTF. In the 114th Congress, multiple bills (H.R. 680, H.R. 2971, S. 1994) propose an increase in the federal motor fuels excise tax. Some bills also contain provisions linking the excise tax rate to increases in inflation (H.R. 680, H.R. 2971, H.R. 1846, S. 1994). Alternatively, other proposals in the 114th Congress would link funding for the HTF with international tax policy changes, or would cut the federal motor fuels tax and devolve authority for transportation projects to the states. The President's FY2017 budget also proposes funding a "21st Century Clean Transportation System" initiative partly with revenue raised from a fee on U.S. crude oil consumption.
This report provides an overview of current law and a recent legislative history of federal motor fuels excise tax rates (with an emphasis on gasoline and diesel fuel for highway use) and the HTF. State motor fuels tax rates are mentioned in brief. The report also includes a summary of the history of the gas tax and funding for the HTF. Issues related to HTF spending programs and infrastructure financing, more broadly, are beyond the scope of this report, but are discussed in CRS Report R42877, Funding and Financing Highways and Public Transportation, by [author name scrubbed] and [author name scrubbed].