The federal government collects 18.4 cents on every gallon of gasoline and 24.4 cents on every gallon of diesel. Both rates took effect on October 1, 1993, under that year’s Omnibus Budget Reconciliation Act, and neither has changed since or been adjusted for inflation.
Those taxes are the main income of the Highway Trust Fund, and the Congressional Budget Office expects the fund’s highway account to run out in fiscal 2028, with its transit account going dry a year earlier. For fiscal 2026 alone, CBO’s June 2026 baseline puts highway account receipts at about $41.6 billion and outlays at about $62.2 billion.
That federal gap gets most of the attention, but federal money is the smaller part of the bill. FHWA’s Highway Statistics table HF-10 counts $284.7 billion in highway receipts across all levels of government in 2023. The federal share of that was $50.9 billion, under 18 percent. States raised $158.4 billion and local governments $75.4 billion. Federal agencies then spent only $3.3 billion on highways directly. Almost everything else they collected moved to the states as grants, which states and localities spend.
The federal taxes and where each cent goes
The trust fund has two main accounts. Each gallon of fuel tax is split among them, plus a tenth of a cent for the Leaking Underground Storage Tank Trust Fund. FHWA’s historical rate table shows the current division, which dates to the 1998 Transportation Equity Act for the 21st Century.
| Federal tax | Rate | Highway Account | Mass Transit Account | LUST Trust Fund |
|---|---|---|---|---|
| Gasoline | 18.4 cents per gallon | 15.44 cents | 2.86 cents | 0.1 cent |
| Diesel | 24.4 cents per gallon | 21.44 cents | 2.86 cents | 0.1 cent |
| New trucks and trailers above a set weight | 12 percent of sale price | Credited to trust fund | n/a | n/a |
| Heavy vehicle use tax (trucks over 55,000 pounds) | $100 to $550 per year | Credited to trust fund | n/a | n/a |
| Certain heavy truck tires | Excise tax | Credited to trust fund | n/a | n/a |
CBO’s 2023 testimony breaks out where the money came from in 2022. Fuel excise taxes supplied $40 billion, 83 percent of trust fund revenue. Gasoline and ethanol blends produced $28 billion, nearly 60 percent, and diesel about a quarter. The truck and trailer sales tax brought in 10 percent. The heavy vehicle use tax and the tire tax contributed smaller amounts. Heavy trucks pay through four separate channels: diesel, the sales tax, the use tax and tires. How their weight shapes the roads they pay for is covered in how commercial trucking shapes highway design.
The 1993 increase did not start out as road money. FHWA’s table shows that from October 1993, 6.8 cents of the gasoline tax went to the Treasury’s general fund for deficit reduction, and from October 1995 the general fund kept 4.3 cents. The Taxpayer Relief Act of 1997 moved that share into the trust fund effective October 1, 1997. The 4.3 cents still behaves differently: CBO notes that the taxes credited to the trust fund, including “all but 4.3 cents” of the federal motor fuel tax, are scheduled to expire on September 30, 2028. CBO’s baseline assumes Congress keeps collecting them.
A fund that spends more than it takes in
Federal law does not let the Highway Trust Fund carry a negative balance. Congress has kept it solvent by transferring money from elsewhere. According to CBO, about $275 billion has gone into the fund since 2008, mostly from the Treasury’s general fund. The Infrastructure Investment and Jobs Act alone transferred $118 billion: $90 billion to the highway account and $28 billion to the transit account.
CBO’s June 2026 projections show what happens when those transfers run out. The highway account’s first shortfall arrives in 2028, at about $11.9 billion. Receipts grow slowly, from $41.6 billion in 2026 to $46.6 billion in 2036, while projected outlays climb from $62.2 billion to $74.4 billion. By 2036 the cumulative shortfall reaches $221.4 billion for the highway account and $96.5 billion for the transit account. Those figures assume spending follows CBO’s baseline, which inflates current obligation limits forward. CBO’s February 2026 version put the highway account’s 2036 shortfall at $201.8 billion. The June update added appropriations enacted after February.
The underlying problem is structural. A per-gallon tax falls behind when prices rise and when vehicles burn less fuel, and CBO’s testimony points to improving fuel efficiency as a drag on receipts. A vehicle that buys no gasoline at all pays none of it, a gap that grows with the charging buildout described in EV charging on the Interstate system.
How federal dollars reach the states
Most federal highway money is apportioned to states by formula under 23 U.S.C. 104. The current formula is mostly a copy of the past. Each state’s starting amount is its share of all states’ fiscal 2021 apportionments, multiplied against the year’s total. The statute then applies three floors. Each state must get at least 95 percent of the estimated trust fund tax payments attributable to highway users in that state (counting only taxes in effect on July 1, 2019), at least 2 percent more than its fiscal 2021 apportionment, and at least 1 percent more than its prior-year amount. Lane miles, traffic and pavement condition do not enter the calculation directly.
Once a state’s total is set, the statute divides it among programs. Three fixed amounts come off the top: the Congestion Mitigation and Air Quality program, metropolitan planning, and the National Highway Freight Program. The remainder is split by percentages that the law writes out to more than a dozen decimal places.
| Program under 23 U.S.C. 104(b) | Share of remaining apportionment |
|---|---|
| National Highway Performance Program | about 59.08 percent |
| Surface Transportation Block Grant Program | about 28.74 percent |
| Highway Safety Improvement Program | about 6.71 percent |
| Carbon Reduction Program | about 2.56 percent |
| PROTECT formula program | about 2.91 percent |
The statute also sets a calendar. Under section 104(e), FHWA must tell each state its apportionment no later than 90 days before the fiscal year begins. On June 29, 2026, FHWA issued notice N4510.915 saying the advance figures for fiscal 2027 “cannot be provided at this time,” pending congressional action to reauthorize the program beyond fiscal 2026. Apportionments set how much a state can commit. How much it may actually obligate in a year is capped separately through annual appropriations, which is why CBO builds its baseline from the obligation limitations in the Consolidated Appropriations Act, 2026.
What a state does with its share then runs through the planning and programming process that turns a list of needs into funded contracts.
Who pays the match
Federal money almost never covers a whole project. Section 120 of title 23 sets the federal share.
| Project type | Standard federal share | Notes |
|---|---|---|
| Interstate System | 90 percent | Can rise toward 95 percent in states with large areas of public and nontaxable Indian land |
| Other federal-aid projects | 80 percent | Same public-land adjustment, capped at 95 percent |
| Listed safety work (such as traffic signalization, roundabouts, safety rest areas) | Up to 100 percent | Limited to 10 percent of a year’s federal-aid apportionments |
The state or local sponsor supplies the rest, so an 80 percent project requires $20 of non-federal money for every $80 drawn. That match is one reason state revenue decisions move federal spending: a state that cannot raise its 20 percent cannot use its apportionment. The federal share also figures in the asset management rules states use to rank rebuild candidates.
The IIJA and the extension
The Infrastructure Investment and Jobs Act (P.L. 117-58) authorized surface transportation programs for fiscal years 2022 through 2026. FHWA describes it as investing $350 billion in highway programs over five years and as the basis for its programs through September 30, 2026.
That date has passed. On September 2, 2026, the President signed H.R. 6500, the Continuing Appropriations and Extensions Act, 2027, which the White House described as extending surface transportation authorities among other programs. The Congressional Research Service’s legislative tracker, updated in mid-September, states that Congress has extended the IIJA authorizations through December 11, 2026, under P.L. 119-103. CRS also notes that Congress has historically extended surface transportation authorizations past their expiration before passing new multiyear bills. The next deadline on record is the extension’s December 11 end date.
What states and local governments raise
States set their own fuel taxes, and the spread is wide. FHWA’s table MF-121T for the 2023 reporting period lists Pennsylvania’s gasoline tax at 61.1 cents per gallon, the highest, and Alaska’s at 8.0 cents, the lowest. California’s was 57.9 cents and Texas’s 20.0 cents. Footnotes to the table describe rates in ten states, including Pennsylvania, New York and Florida, as variable or adjusted over time, which the federal rate is not.
Fuel taxes are only part of state income. The table below uses FHWA’s all-government funding table for 2023, in billions of dollars. It counts revenue by the government that collected it, so federal grants to states are not counted twice.
| Source (2023) | Federal | State | Local | Total |
|---|---|---|---|---|
| Motor-fuel and vehicle taxes | 34.8 | 78.8 | 4.8 | 118.5 |
| Tolls | n/a | 16.4 | 3.1 | 19.5 |
| Property taxes and assessments | n/a | n/a | 12.3 | 12.3 |
| General fund appropriations | 11.3 | 11.8 | 27.2 | 50.2 |
| Other taxes and fees | 0.2 | 25.3 | 9.8 | 35.3 |
| Investment income and other receipts | 4.6 | 16.0 | 10.5 | 31.1 |
| Bond issue proceeds | n/a | 10.1 | 7.7 | 17.8 |
| Total receipts | 50.9 | 158.4 | 75.4 | 284.7 |
The table then shows the money moving. The federal government sent $46.2 billion from the trust fund to the states in 2023, plus $10.7 billion from other federal funds split between states and localities. States in turn passed $18.3 billion of highway-user revenue to local governments. After those transfers, states spent $178.7 billion on highways and local governments $103.3 billion. CBO’s 2022 comparison lands in the same place: $52 billion in federal spending against $180 billion from state and local governments, about three times as much. Federal money goes mostly to capital projects, while states and localities also carry operations and maintenance.
The local column has a different shape from the rest. Local governments raised only about $8 billion of their highway money from fuel taxes, vehicle taxes and tolls. The rest came from general fund appropriations, property taxes and other levies that people pay whether or not they drive. Nationwide, FHWA calculates that highway-user revenues covered 48.37 percent of total highway disbursements in 2023. Of the $285.3 billion spent, capital outlay took $139.1 billion and maintenance and traffic services $67.1 billion, with administration, highway patrol and safety, interest and bond retirement making up the rest. Readers who want the state-by-state rows behind these totals can find them through the HF, SF and LGF table series described in this guide to FHWA data sources, and more on how the network itself is designed sits with the rest of the highway explainers.