What is gas tax holiday? meaning explained

As financial pressure mounts with inflation and gas prices hitting new highs, President Biden Will ask Congress on Wednesday To suspend federal gas taxes for the next three months to reduce costs.

Biden is also expected to urge states to suspend state gas taxes — as state fees often exceed federal taxes. Biden administration says tax holiday is a way to offer morebreathing room“And lower costs in the long run.

What does gas tax holiday mean?

The gas tax holiday would suspend the tax of 18 cents per gallon of gas and 24 cents per diesel that consumers typically pay at the pump for three months. The federal gas tax paid by drivers goes to the Highway Trust Fund, which Biden has said will not be negatively affected by the tax suspension because the deficit is small in which the country can “afford” the tax holiday.

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What about state gas taxes?

Biden is urging states to suspend state gas taxes as well. Connecticut and New York have already temporarily suspended gas taxes, while Illinois and Colorado have delayed previously planned tax and fee hikes. “The president believes that more states and local governments should do the same,” the White House said in a statement.

When will gas prices come down?

Earlier this week, prices declined for the first time since April, falling to Average $4.98, According to GasBuddy Analyst Patrick De Haan, the average price may drop below $4.90 next week. The change comes with US oil production reaching its highest level in two years, as well as the Fed’s move to raise interest rates by 0.75 percent.

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