American Fuel Affordability Act
- Sponsor
- Rep. Steube, W. Gregory [R-FL-17]
- Committees
- Ways and Means Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
The bill aims to reduce fuel costs for consumers and businesses while stimulating domestic fossil fuel refining capacity and production through significant tax incentives, with the federal general fund backstopping infrastructure trust funds.
What it actually does
This bill repeals federal excise taxes on diesel fuel, mandates transfers from the general fund to the Highway Trust Fund and Leaking Underground Storage Tank Trust Fund to offset lost revenue, and establishes new tax credits and permanent accelerated depreciation to incentivize the construction and production of new domestic oil refineries.
Proponents argue
Supporters argue the bill will lower fuel prices for consumers and businesses by removing federal excise taxes, stimulate domestic energy production, and enhance energy independence by encouraging new refinery construction and increased output. They highlight the economic benefits of reduced transportation costs and job creation in the energy sector.
Opponents contend
Opponents would likely argue that repealing diesel fuel taxes would significantly reduce funding for the Highway Trust Fund and Leaking Underground Storage Tank Trust Fund, potentially jeopardizing infrastructure projects and environmental cleanup, despite the proposed general fund transfers. They might also contend that the tax credits for refineries constitute corporate welfare and could exacerbate climate change by incentivizing fossil fuel production.
The bill is relatively short and its core provisions are understandable, making it accessible for a reader to evaluate within a reasonable timeframe.
Section 2
Repeal of Excise Taxes on Diesel Fuel
This section eliminates the federal excise taxes currently imposed on diesel fuel under Internal Revenue Code sections 4041(a)(1) and 4081(a)(2)(A)(iii). These taxes are typically paid by producers or importers and passed on to consumers. Conforming amendments are made to related sections of the tax code. The repeal applies to diesel fuel sold, used, removed, or entered after the date of enactment.
Supporters argue
Supporters argue this repeal will directly lower the cost of transportation and goods, providing economic relief to businesses and consumers, especially those in industries heavily reliant on diesel like trucking, agriculture, and construction.
Critics contend
Opponents contend that repealing these taxes will deplete critical infrastructure and environmental trust funds, potentially leading to underfunded road maintenance, bridge repairs, and cleanup efforts, unless the general fund transfers are consistently maintained and sufficient.
Tradeoffs
The bill balances the desire for lower fuel costs and economic stimulus against the need for dedicated funding for infrastructure and environmental programs.
Section 3
General Fund Transfers to Highway and LUST Trust Funds
To offset the revenue loss from repealing diesel fuel excise taxes, this section mandates that the Secretary of the Treasury transfer amounts from the general fund to the Highway Trust Fund and the Leaking Underground Storage Tank (LUST) Trust Fund. These transfers are intended to equal the reduction in amounts that would have been credited to these trust funds due to the diesel tax repeal.
Section 4, adding new IRC Section 48F
New Refinery Construction Investment Tax Credit
This section establishes a new investment tax credit for the construction of new oil refineries in the United States. Taxpayers can claim a credit equal to 35% of their qualified investment in property (tangible personal property or integral tangible property like buildings) that is part of a qualified refinery facility. To qualify, construction must begin after enactment and before January 1, 2032, and the facility must be placed in service before January 1, 2037.
Section 5, adding new IRC Section 45BB
New Refinery Production Tax Credit
This section creates a new general business credit of 5 cents per gallon for gasoline or diesel produced by a taxpayer at a "qualified newly constructed refinery" and sold to an unrelated person. A qualified newly constructed refinery is one that meets the criteria for the Section 48F investment credit and was placed in service within 10 years of the production date.
Section 6
Permanent 100% Bonus Depreciation for New Refinery Construction
This section makes the 100% bonus depreciation (special allowance) permanent for property integral to the new construction of qualified refinery facilities, as defined in Section 48F(d)(1). This means businesses can immediately deduct the full cost of eligible refinery equipment and structures, rather than depreciating them over several years, providing a significant upfront tax benefit. The existing phase-down of bonus depreciation is waived for this specific type of property.
Conforming amendments in Section 2(c) remove references to diesel fuel from various parts of the Internal Revenue Code, including striking specific clauses and redesignating subsections. For example, Section 4081(c)(1) is amended to remove reference to clause (iii) of subsection (a)(2)(A), which previously specified the diesel fuel tax rate.
Section 2(c) and Section 4081(c)(1) (as redesignated)
Why it matters:Standard legislative practice for updating statutory cross-references and removing obsolete language after a primary repeal. Not necessarily evasive.
Case for: Necessary to ensure the tax code is consistent with the repeal of diesel fuel excise taxes, preventing confusion and unintended legal interpretations.
Case against: No specific case against conforming amendments themselves, though they are a direct consequence of the main policy change.
Estimated impact: Ensures legal clarity and consistency, preventing future disputes over tax applicability.
Section 48F(e)(2) applies "rules similar to the rule under section 45(b)(3)" for property financed by subsidized energy financing or private activity bonds. Section 45(b)(3) generally reduces the credit amount if property is financed by such means.
Section 4(e)(2) and Section 45(b)(3)
Why it matters:Standard legislative practice to avoid re-writing common tax rules, but requires knowledge of other IRC sections.
Case for: Ensures that the new refinery construction credit is not "double-dipped" with other federal subsidies or tax-exempt financing, promoting fiscal responsibility and fair application of incentives.
Case against: No specific case against this anti-abuse rule, though some might argue it complicates financing for new projects.
Estimated impact: Prevents potential abuse of the credit and ensures that the incentive is targeted as intended.