Bill would cut federal gas tax automatically when prices top $3.99 a gallon

What does this do?

HR 8600 creates an automatic two-part system that activates whenever the national average gasoline price exceeds $3.99 per gallon. The federal fuel excise tax is reduced cent-for-cent above that threshold, so a $4.49 average price would cut the tax by 50 cents per gallon. Separately, three tax benefits for oil and gas producers are suspended during those same high-price periods: a drilling-cost deduction, an enhanced oil recovery credit, and a credit for low-output well production.

Who does it affect?

Everyday drivers could see lower pump prices if tax savings are passed through the supply chain, though that outcome is not guaranteed. Oil and gas producers, fuel refiners, and distributors face changed tax obligations whenever the price trigger is active.

Why does it matter?

Removing producer tax breaks during high-price periods appears intended to offset the revenue lost from the fuel tax cut. The bill applies starting in tax year 2026 with no set end date beyond the automatic price trigger.

What does it cost, and who pays?

• Treasury backfills Highway Trust Fund
• Lost tank fund revenue also replaced
• Oil producers lose 3 tax breaks at trigger