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What is the Gas Guzzler Tax?

Mary McMahon
Updated May 17, 2024
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The gas guzzler tax is a tax which is designed to discourage the production and sale of vehicles with poor fuel economy, known as gas guzzlers because they “drink” large amounts of gas to stay on the road. This tax is assessed at the time of sale, and it is based upon the fuel economy of the vehicle, not the purchase price. It is important to remember that since issues of energy use and fuel economy are getting more pressing, the gas guzzler tax is only one part of a complex framework in the United States.

The tax was passed as part of the Energy Act of 1978, an act which was passed in response to the oil crisis of the 1970s. Members of Congress were very concerned that Americans were heavily relying on oil, and they wanted to encourage the production of more fuel efficient vehicles to avoid another economic catastrophe brought about by fluctuations in oil price. The 1970s also brought about a rise in concerns about the environmental impact of oil usage.

If a car gets 22.5 miles per gallon (36 kilometers per gallon) or more, it is not subject to the gas guzzler tax. Cars which get less than this are subject to a scaled tax, which starts out at $1000 United States Dollars (USD) and get progressively larger as the car becomes less gas efficient. The highest bracket is $7700 USD, for a vehicle which gets less than 12.5 miles per gallon (20 kilometers per gallon). In this way, the government hopes to encourage car purchasers to consider more fuel efficient vehicles, thereby driving manufacturers to produce said vehicles.

Fuel efficiency estimates are obtained from the United States Environmental Protection Agency. Car manufacturers must test vehicles in laboratory conditions and report the results to the EPA, and the EPA may also choose to retest some vehicles to confirm these results. The mileage estimates used in the application of the gas guzzler tax combine city and highway miles per gallon to come up with an average fuel economy.

Critics of the gas guzzler tax point out that it is only in place on cars. Light trucks and Sport Utility Vehicles (SUVs) are not counted, and since SUVs often have extremely poor gas efficiency, this seems somewhat unfair. In addition, because the gas guzzler tax is based on fuel economy rather than price, someone might end up paying a substantial percentage of a car's price in tax, or a small fraction, depending on the value of the car. This would seem to penalize people who purchase less expensive cars, by driving the overall cost of the car up.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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