• October 22nd, 2021

The federal Highway Trust Fund (HTF) is the primary source of federal funding used by state governments to maintain and improve U.S. surface transportation infrastructure. The majority of HTF revenues (which typically total nearly $40 billion annually) are derived from fuel taxes. These fuel taxes operate as a road user fee, with larger vehicles (e.g. Class 8 tractor-trailers with low miles per gallon [MPG]) paying substantially more per mile for road use than smaller vehicles (e.g. compact cars with very high MPG).

There are several headwinds facing the HTF. First, the per-gallon federal fuel tax rates were last increased in 1993, which has led to inflation-related roadway investment shortfalls. This underfunding occurred even while fuel consumption has increased substantially over the past 30 years. A second issue is the improving fuel efficiency of the U.S. car and truck fleet. A vehicle built today can travel much farther on a gallon of fuel than vehicles from the early 1990s, and as a result the typical driver contributes less per mile to highway tax revenue than that same driver did decades ago. Finally, across the past ten years, the electric vehicle share of the U.S. fleet has grown, and such vehicles by their very nature do not pay any federal motor fuels taxes.

Read the full report here.