Legislative Push for Fuel Price Relief: Tax Breaks and Commuter Deductions Proposed Amid Pump Pain

As gasoline and diesel costs remain elevated due to supply chain disruptions stemming from the conflict with Iran, members of Congress are introducing measures to alleviate the financial burden on American households.

Recently, House representatives have put forward multiple legislative approaches, ranging from a temporary suspension of federal fuel taxes and restrictions on diesel exports to significant tax deductions for commuter expenses.

These initiatives gain urgency as affordability becomes a central issue heading into the November 3 midterm elections. A recent Reuters/Ipsos poll of 1,167 adults conducted in late August revealed that 47% of registered voters consider the cost of living the most critical factor in their voting decisions.

Commuter Tax Deduction Aims to Offset Daily Travel Expenses

Bipartisan legislation introduced on Monday seeks to establish an annual tax deduction of up to $4,080—equating to $340 per month—for commuting costs, according to a statement from Representative Laura Gillen, D-N.Y. The bill, co-sponsored by Republicans Jeff Van Drew and Tom Kean Jr. from New Jersey, targets expenses related to fuel, public transit, and tolls.

Dubbed the Lowering Commuting Costs Act, the proposal would implement an “above the line” deduction, making it accessible to all taxpayers rather than exclusively those who itemize their deductions.

“If businesses can deduct operational costs, working individuals should be able to deduct the expense of getting to and from their jobs,” Van Drew stated in the release.

However, the proposal faces certain limitations, according to Garrett Watson, vice president of federal tax policy at the Tax Foundation.

“Taxpayers would only receive relief during tax season, which offers no immediate short-term assistance,” Watson noted. “Additionally, lower-income taxpayers might see little to no benefit since they must have sufficient taxable income to offset to realize any savings from the deduction.”

Federal Gas-Tax Suspension Could Offer Modest Savings

Separately, Representative Andy Harris, R-Md., recently introduced a bill to temporarily suspend the federal excise tax on gasoline and diesel through December 31.

Currently, these federal levies stand at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel, primarily funding highway and public transit projects, according to the U.S. Energy Information Administration.

This measure mirrors similar proposals introduced earlier this spring shortly after the Iran conflict began.

To contextualize the impact, a typical passenger vehicle gas tank holds 12 to 16 gallons, while larger SUVs and trucks often feature even larger capacities, per Edmunds.

A suspension of these taxes would translate to savings of approximately $2.76 per 15-gallon fill-up for gasoline, and $3.66 per 15 gallons for diesel.

Still, Watson cautioned that it remains uncertain whether all such savings would reach consumers. “If demand reacts to the tax suspension, the resulting market dynamics could drive up pre-tax prices, ultimately benefiting producers,” he explained.

Diesel Export Restrictions Aim to Boost Domestic Supply

Other legislators are pursuing an alternative strategy to reduce diesel costs.

Representative Tim Burchett, R-Tenn., introduced two bills last week aimed at restricting U.S. diesel exports to lower prices.

One bill would prohibit diesel exports through January 2027, while the other would trigger a ban if the national average diesel price hits $5 per gallon, allowing exports to resume only after the average falls to or below $4.50 for 30 consecutive days.

The rationale is that retaining more domestically produced diesel within the U.S. would increase supply and drive down prices. However, energy analysts warn of potential unintended consequences in global markets.

“An export ban could temporarily depress Gulf Coast diesel prices, but there is no guarantee that relief will reach the regions experiencing the highest prices. Over time, it could reduce refinery runs and tighten supplies of other fuels, including gasoline,” Patrick De Haan, head of petroleum analysis at GasBuddy, posted on X on Monday.

It remains unclear whether Congress will have the opportunity to consider any of these proposals when lawmakers return following the midterm elections.

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