What Is a Gas Tax Holiday? Janet Yellen Weighs Option Amid Pain at Pump

With American drivers still feeling the crunch of high gas prices, Treasury Secretary Janet Yellen has weighed in on the possibility of a gas tax holiday.

A gas tax holiday would, as its name suggests, be a period of time in which the tax imposed on all gas prices would be done away with temporarily, offering a measure of relief to consumers. As of now, the federal gas tax is around 18.4 cents per gallon.

Yellen discussed the current gas price situation during a Sunday appearance on ABC's This Week. When asked about the possibility of President Joe Biden implementing gas tax holidays in the face of high prices, Yellen gave a somewhat affirmative but non-committal answer.

"That's an idea that's certainly worth considering," Yellen said, noting that President Biden is "ready to work with Congress" on battling gas prices.

janet yellen gas tax holiday
Treasury Secretary Janet Yellen on Sunday said that a gas tax holiday would be " an idea that’s certainly worth considering" in the face of high fuel costs. Above, a shot of Yellen at a committee hearing in 2015. Chip Somodevilla/Getty Images

"If Congress will work with him to enact some of the administration's programs, we can bring down other costs that are burdening households, like prescription drugs, health care costs, and increase the supply of affordable housing," Yellen added.

Energy Secretary Jennifer Granholm also spoke about the possibility during a Sunday appearance on CNN's State of the Union, going so far as to say that President Biden is actively considering the idea. She did, however, also note that suspending the gas tax could have consequences for Biden's other major legislative goals.

"Part of the challenge with the gas tax, of course, is that it funds the roads, and we just did a big infrastructure bill to help fund the roads," Granholm explained. "If we remove the gas tax that takes away the funding that was just passed by Congress to be able to do that."

Newsweek reached out to the White House for comment.

In March, six governors, hailing from states including Wisconsin, Minnesota, New Mexico, and Colorado, called for a pause on the gas tax as bans on Russian oil imports caused prices to climb. At the time, the national average was around $4.32 a gallon.

"At a time which people are directly impacted by rising prices on everyday goods, a federal gas tax holiday is a tool in the toolbox to reduce costs for Americans, and we urge you to give every consideration to this proposed legislation," the state leaders wrote in a letter to Congress.

A bill was also introduced in March by Democratic Rep. Adam Schiff that would enact a gas tax pause through the end of 2023. As of Sunday, it was last said to have been "referred to the Committee on Ways and Means."