Gas Prices Relief Act of 2026
- Sponsor
- Sen. Kelly, Mark [D-AZ]
- Committees
- Finance Committee (primary)
- Last action
- Mar 9, 2026
Bottom line
The bill provides a temporary federal gasoline tax holiday, backfilling lost trust fund revenue from the general fund, and includes provisions to ensure consumers receive the price reduction.
What it actually does
This bill temporarily suspends the federal gasoline tax and the Leaking Underground Storage Tank Trust Fund financing rate from its enactment date until October 1, 2026. To prevent a shortfall in dedicated infrastructure funding, it mandates transfers from the Treasury's general fund to the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund to cover the lost revenue. The bill also declares a policy that the tax reduction benefits must be passed on to consumers, authorizing the Secretary of the Treasury to enforce this with monetary penalties.
Proponents argue
Proponents argue that the bill provides immediate and tangible financial relief to American consumers facing high gasoline prices, easing the burden on household budgets. They contend that by backfilling the trust funds from the general fund, critical infrastructure projects and environmental cleanup efforts will not be jeopardized. Furthermore, the enforcement mechanism is intended to ensure that the intended benefits are passed directly to consumers rather than being absorbed by fuel producers or dealers.
Opponents contend
Opponents raise concerns about the bill's fiscal impact, arguing that shifting the burden from a user fee to the general fund effectively increases the national debt if not offset by other revenue. They also question the effectiveness and enforceability of mandating that fuel producers and dealers pass on the tax savings, suggesting that market dynamics may allow a significant portion of the reduction to be captured by the industry. Critics may also argue that encouraging gasoline consumption runs counter to long-term environmental goals.
The bill is very short and clearly written, making it highly accessible for any reader to understand its core provisions and implications quickly.
Section 2(a)
Temporary Suspension of Federal Gasoline Tax
This provision sets the federal excise tax rate on gasoline to zero, and also suspends the separate Leaking Underground Storage Tank Trust Fund financing rate. This tax holiday would be in effect from the date the bill is enacted until October 1, 2026. The intent is to reduce the price consumers pay at the pump by the amount of the federal tax.
Supporters argue
Supporters argue that this provision directly lowers the cost of transportation for millions of Americans, providing immediate financial relief to households and businesses struggling with high energy prices. They contend it could also stimulate economic activity by freeing up consumer spending.
Critics contend
Critics argue that while intended to help consumers, the full benefit of the tax reduction may not be passed through to the pump, with some portion potentially absorbed by the industry. They also highlight the significant loss of dedicated revenue for infrastructure funding, even with general fund transfers.
Tradeoffs
The primary tradeoff is between providing immediate consumer relief through lower gas prices and maintaining a stable, dedicated funding source for federal highway infrastructure and environmental cleanup programs.
Section 2(b)
General Fund Transfers to Maintain Trust Fund Solvency
This section requires the Secretary of the Treasury to transfer funds from the general fund of the Treasury to both the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund. The amount transferred will be equal to the revenue that would have been collected by the gasoline tax and the LUST financing rate during the holiday period. These transfers are intended to ensure that these dedicated trust funds remain solvent and can continue their planned expenditures despite the tax holiday.
Section 2(c)
Mandate to Pass Tax Reduction to Consumers and Enforcement
This section establishes a policy that consumers should immediately receive the full benefit of the tax reduction. It requires transportation motor fuels producers and other dealers to lower prices to reflect this reduction. Furthermore, it states that those who fail to pass on the savings will be subject to monetary penalties. The Secretary of the Treasury is explicitly authorized to use all applicable authorities to ensure these benefits are received by consumers.
This subsection grants the Secretary of the Treasury broad authority to use 'all applicable authorities' to ensure that the benefits of the tax reduction are passed on to consumers.
Section 2(c)(2)
Why it matters:This phrasing is common in legislation to provide flexibility to regulatory agencies without needing to enumerate every possible enforcement tool. It avoids limiting the Secretary's options but also leaves the specifics of enforcement open to interpretation.
Case for: Supporters argue that this broad authority is necessary for the Treasury to effectively combat potential price gouging and ensure the tax holiday achieves its intended consumer benefit. Specificity could create loopholes, whereas broad authority allows for adaptive enforcement.
Case against: Critics might argue that the broad and unspecified nature of 'all applicable authorities' could lead to arbitrary enforcement or overreach by the Treasury Department. Without clear guidelines, businesses may face uncertainty regarding compliance and potential penalties.
Estimated impact: The effectiveness of this enforcement mechanism will directly determine the actual financial benefit consumers receive from the tax holiday, potentially impacting billions of dollars in savings.