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Several states are considering suspending state-level gasoline and diesel taxes (excluding the federal tax). Table 1 presents the projected impact on the per-gallon price of gasoline and diesel, as well as the estimated revenue loss to each state from suspending these taxes for two months. Revenue loss estimates are adjusted for leakage due to existing partial exemptions and refunds (e.g., diesel used in farming and food processing, and gasoline used in off-highway agricultural activities).

Table 1: State-by-State Projected Price Drops and Revenue Losses
from a Two-Month Gas Tax Holiday

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Table 1: State-by-State Projected Price Drops and Revenue Losses from a Two-Month Gas Tax Holiday
State	Gas Price Drop ($/gal)	Diesel Price Drop ($/gal)	Revenue Loss, 2 Months ($)
Alabama	−$0.22	−$0.20	$210,062,428
Alaska	−$0.06	−$0.05	$8,577,309
Arizona	−$0.13	−$0.16	$127,254,311
Arkansas	−$0.18	−$0.17	$95,318,174
California	−$0.51	−$0.52	$1,522,425,187
Colorado	−$0.21	−$0.21	$108,055,255
Connecticut	−$0.18	−$0.29	$80,440,979
Delaware	−$0.17	−$0.13	$21,715,820
District of Columbia	−$0.26	−$0.21	$4,619,160
Florida	−$0.29	−$0.24	$724,647,729
Georgia	−$0.25	−$0.23	$361,958,590
Hawaii	−$0.13	−$0.11	$15,661,593
Idaho	−$0.24	−$0.20	$65,082,395
Illinois	−$0.48	−$0.44	$651,423,204
Indiana	−$0.39	−$0.37	$391,988,330
Iowa	−$0.22	−$0.20	$107,816,097
Kansas	−$0.18	−$0.16	$88,506,891
Kentucky	−$0.19	−$0.14	$125,994,963
Louisiana	−$0.15	−$0.13	$105,980,039
Maine	−$0.22	−$0.19	$45,796,583
Maryland	−$0.33	−$0.28	$241,795,466
Massachusetts	−$0.20	−$0.17	$133,660,518
Michigan	−$0.49	−$0.30	$561,281,455
Minnesota	−$0.24	−$0.19	$189,533,011
Mississippi	−$0.15	−$0.13	$70,812,952
Missouri	−$0.22	−$0.18	$206,014,044
Montana	−$0.24	−$0.18	$45,243,639
Nebraska	−$0.24	−$0.19	$81,562,856
Nevada	−$0.17	−$0.17	$65,851,140
New Hampshire	−$0.17	−$0.14	$31,078,590
New Jersey	−$0.35	−$0.31	$416,999,691
New Mexico	−$0.14	−$0.14	$60,951,201
New York	−$0.17	−$0.14	$285,526,677
North Carolina	−$0.30	−$0.24	$401,233,621
North Dakota	−$0.17	−$0.14	$29,476,766
Ohio	−$0.28	−$0.28	$483,656,426
Oklahoma	−$0.14	−$0.12	$106,672,826
Oregon	−$0.29	−$0.24	$161,425,600
Pennsylvania	−$0.42	−$0.45	$561,462,090
Rhode Island	−$0.30	−$0.25	$30,117,875
South Carolina	−$0.21	−$0.17	$160,473,600
South Dakota	−$0.22	−$0.18	$35,164,500
Tennessee	−$0.20	−$0.17	$211,028,160
Texas	−$0.14	−$0.12	$576,828,000
Utah	−$0.28	−$0.24	$107,519,264
Vermont	−$0.23	−$0.20	$19,874,505
Virginia	−$0.30	−$0.26	$351,410,250
Washington	−$0.43	−$0.37	$329,081,019
West Virginia	−$0.26	−$0.21	$70,362,406
Wisconsin	−$0.24	−$0.20	$180,315,324
Wyoming	−$0.17	−$0.14	$25,652,784

Sources and Notes:
Gas Tax Rate ($/gal): Federation of Tax Administrators (FTA) / State Revenue Departments. Rates projected as of January 1, 2026; state portion only.
Diesel Tax Rate ($/gal): Federation of Tax Administrators (FTA) / State Revenue Departments. Rates projected as of January 1, 2026; state portion only.
Actual Reported Annual Revenue ($): Net treasury receipts (Highway Fund) as reported by FHWA Table MF‑1 and state ACFRs.
Gas Consumption (gal): EIA SEDS Table F10 (Motor Gasoline). One barrel = 42 gallons. Data represent 2024 transportation‑sector estimates.
Diesel Consumption (gal): EIA SEDS Table F12 (Distillate Fuel Oil). One barrel = 42 gallons. Data represent 2024 transportation‑sector estimates.
Price Drop Methodology: PWBM Synthetic Control findings. Gasoline pass‑through = 0.72; diesel pass‑through = 0.60 (assumed lower due to commercial supply stickiness). See Effects of a State Gasoline Tax Holiday.

The One Big Beautiful Bill Act (OBBBA) instituted a cap on the marginal tax benefit of itemized deductions of 35 percent beginning in 2026. We present conventional 10-year revenue forecasts and distributional tables for two options: Lower the cap on the marginal tax benefit of itemized deductions from 35 percent to 32 percent (Option 1) or to 24 percent (Option 2), beginning in 2026.

Table 1 shows that the 32 percent cap would raise $110 billion over ten years. The 24 percent cap would raise $475 billion over ten years.

Table 1: Estimated Revenue Effects,
FY 2026–2035

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Table 1: Estimated Revenue Effects, FY 2026–2035
Provision	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Total, 2026–2035
Option 1: Cap Itemized Deductions at 32%	4.8	10.0	10.4	10.9	11.2	11.3	12.0	12.6	13.2	14.0	110.4
Option 2: Cap Itemized Deductions at 24%	21.0	44.6	46.9	49.1	50.2	47.0	49.7	52.6	55.6	58.6	475.3

Note: Change in revenue, billions of dollars.

Table 2 presents conventional distributional analysis. Option 1 mostly impacts those in the top 10 percent of the income distribution while Option 2 impacts those in the top 20 percent.

Table 2: Estimated Distributional Effects,
TY 2027

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Table 2: Estimated Distributional Effects, TY 2027
Income Group	Lower Cutoff ($)	Avg. Change in After-Tax Income ($)	Avg. % Change in After-Tax Income
Option 1: Cap Itemized Deductions at 32%
First quintile	0	0	0%
Second quintile	18,000	0	0%
Middle quintile	53,000	0	0%
Fourth quintile	96,000	0	0%
80–90%	179,000	0	0%
90–95%	272,000	−55	0%
95–99%	401,000	−470	−0.1%
99–99.9%	1,020,000	−2,425	−0.2%
Top 0.1%	4,451,000	−22,990	−0.2%
Option 2: Cap Itemized Deductions at 24%
First quintile	0	0	0%
Second quintile	18,000	0	0%
Middle quintile	53,000	0	0%
Fourth quintile	96,000	0	0%
80–90%	179,000	−50	0%
90–95%	272,000	−255	−0.1%
95–99%	401,000	−2,680	−0.6%
99–99.9%	1,020,000	−9,190	−0.7%
Top 0.1%	4,451,000	−90,535	−0.7%

Note: TY = tax year.

Gas Tax Holidays: Price and Revenue Effects by State

A Lower Cap on the Marginal Tax Benefit of Itemized Deductions