Gas Tax Revenue to Decline as Traffic Drops 38 Percent

The coronavirus pandemic is affecting most aspects of the economy, and motor fuel consumption is no exception. As social distancing recommendations, shelter-in-place-orders, and quarantines have upended American life in an effort to slow the spread of the virus, road traffic has declined dramatically around the country.

While the mitigation policies will be felt across most tax categories including excise taxesincome taxes, and sales taxes, a key consequence of millions of people staying at home is fewer cars on the roads. Fewer people driving means fewer people buying gasoline, which may have positive effects on air pollution but could be detrimental to motor fuel excise tax revenue for federal and state governments.