What Is a Gas Tax Holiday? What This Means for Your Next Time at the Pump The proposal would suspend federal gas taxes for the next three months.

By Madeline Garfinkle

Opinions expressed by Entrepreneur contributors are their own.

As financial pressures mount with inflation and gas prices reaching new highs, President Biden will ask Congress on Wednesday to suspend federal gas taxes for the next three months to ease costs.

The administration is also expected to urge states to suspend state gas taxes — since state levies are often higher than federal taxes — saying the tax holiday is a way to offer more "breathing room" and lower costs in the long run.

What is the meaning of a gas tax holiday?

The gas tax holiday would suspend the tax of 18 cents per gallon of gas and 24 cents per diesel that consumers normally pay at the pump for three months. The federal gas taxes paid by drivers goes towards the Highway Trust Fund, which the administration has said will not be negatively affected by the tax suspension as the deficit is at a low wherein the country can "afford" the tax holiday.

Related: Biden is Releasing 100 Million Barrels of Oil. Will This Actually Have Any Effect on Gas Prices?

What about state gas taxes?

States are also being urged to suspend state gas taxes. Connecticut and New York have already temporarily suspended gas taxes, while Illinois and Colorado have delayed previously planned tax and fee increases. "The President believes more states and local governments should do so," the White House said in a statement.

When will gas prices go down?

Earlier this week, prices dropped for the first time since April, falling to an average of $4.98. According to GasBuddy analyst Patrick De Haan, average prices could fall below $4.90 next week. The shift comes in part from the Fed's move to raise interest rates by 0.75 percent along with U.S. oil production reaching its highest level in two years.

Related: Hitting the Road for Summer Travel? Sticker Shock at the Pump Is Going to Burn: What to Expect

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Starting a Business

These Yale Students Raised $3 Million in 14 Days to Build Their 'Anti-Facebook' Startup: 'I Can See My Childhood Self Looking Up to Me.'

Two 21-year-old Yale juniors are changing digital networking with Series, an AI-powered platform backed by $3 million in venture capital.

Growing a Business

The AI Playbook Billion-Dollar Brands Are Using to Automate & Dominate (And How You Can Too)

AI isn't just a tool — it's replacing entire teams. Learn how top brands use it to run sales, ops and marketing 24/7.

Business News

Google Layoffs Affect Hundreds in Division Working on Chrome Browser, Pixel Phones

A Google spokesperson said the move would help Google run more efficiently.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Growing a Business

How I Replaced a $2,000-a-Month SEO Agency and Built My Own Growth System as a Solo Founder

15 proven tactics I used to grow my startup's visibility and backlinks — without writing a single cold email.