Federal Excise Taxes — Fuel, Air Travel, Firearms, Tobacco & More

Federal excise taxes are taxes on specific goods, activities, and services rather than on income or wealth — distinct from the federal income tax and FICA payroll tax that fund the bulk of federal revenue. You pay them every time you buy gasoline, purchase an airline ticket, buy a firearm or ammunition, or even use your telephone. Most are invisible at the register — built into the pump price or the ticket fare — but they collectively raise over $100 billion per year and fund some of the federal government's most specific-purpose trust funds: the Highway Trust Fund, the Airport and Airway Trust Fund, the Black Lung Disability Trust Fund, and the Sport Fish Restoration fund. Unlike income taxes, excise taxes are flat rates on transactions and are regressive by nature — they consume a larger share of income for lower-income households who spend more of every dollar.

Current Law (2026)

Tax	Rate	Who Pays
Gasoline (highway use)	18.3 cents/gallon	Fuel producer/importer at terminal
Diesel (highway use)	24.3 cents/gallon	Fuel producer/importer at terminal
Aviation fuel (commercial)	4.3 cents/gallon	Fuel supplier
Aviation gasoline (general aviation)	19.3 cents/gallon	Fuel supplier
Air passenger ticket	7.5% of fare	Passenger (collected by airline)
Air passenger segment fee	$5.30 per domestic segment (2026); $11.30 Alaska/Hawaii	Passenger (collected by airline)
International air departure/arrival	$23.40 per flight (2026)	Passenger (collected by airline)
Air freight	6.25% of amount paid	Shipper
Heavy trucks/trailers (at retail)	12% of sales price	Retailer (on trucks >33,000 lbs GVW)
Truck tires	Up to 9.45 cents per 10 lbs over 3,500 lbs load	Tire manufacturer
Heavy vehicle use tax	Up to $550/year	Owner (vehicles ≥55,000 lbs)
Coal (underground mines)	$1.10/ton	Coal producer
Coal (surface mines)	$0.55/ton	Coal producer
Pistols and revolvers	10% of manufacturer price	Manufacturer/importer
Other firearms and shells/cartridges	11% of manufacturer price	Manufacturer/importer
Sport fishing equipment	10% of manufacturer price	Manufacturer/importer
Bows, arrows, archery equipment	11% of manufacturer price	Manufacturer/importer
Telephone/communications services	3% of amounts paid	Caller/subscriber

Legal Authority

26 U.S.C. § 4081 — Gasoline and diesel excise tax: imposed at the terminal rack (when fuel leaves a refinery or pipeline terminal) rather than at retail; sets rates and the Highway Trust Fund allocation
26 U.S.C. § 4041 — Diesel fuel and kerosene for highway/rail use: imposes tax on diesel and kerosene sold or used in highway vehicles or trains at the rate specified in § 4081
26 U.S.C. § 4261 — Air passenger ticket tax: imposes 7.5% on domestic air fares, $5.30 per domestic segment (2026, indexed), $23.40 international arrival/departure (2026, indexed); funds the Airport and Airway Trust Fund
26 U.S.C. § 4271 — Air freight waybill tax: 6.25% on amounts paid for transportation of property by air; collected by the airline
26 U.S.C. § 4051 — Heavy truck and trailer retail excise tax: 12% on retail price of truck chassis, bodies, and tractor-trailers; does not apply to vehicles with gross vehicle weight of 33,000 lbs or less
26 U.S.C. § 4071 — Tire excise tax: rate of 9.45 cents per 10 lbs of maximum rated load over 3,500 lbs for standard tires; 4.725 cents for bias-ply or super single tires
26 U.S.C. § 4481 — Heavy vehicle use tax (HVUT): annual tax on highway motor vehicles with gross weight of 55,000+ lbs; graduated scale up to $550/year for 75,000+ lb vehicles
26 U.S.C. § 4121 — Coal excise tax: $1.10/ton from underground mines, $0.55/ton from surface mines, capped at 4.4% of sales price; funds the Black Lung Disability Trust Fund
26 U.S.C. § 4181 — Firearms and ammunition excise tax (Pittman-Robertson): 10% on pistols and revolvers, 11% on other firearms and ammunition; collected from manufacturers and importers
26 U.S.C. § 4161 — Sport fishing and archery excise tax (Dingell-Johnson/Wallop-Breaux): 10% on sport fishing equipment, limited to $10 for fishing rods/poles; 11% on bows and archery equipment; 3% for electric outboard motors and tackle boxes
26 U.S.C. § 4251 — Telephone and communications services excise tax: 3% on local and toll telephone service and teletypewriter exchange service; paid by the person paying for communications

Fuel Taxes and the Highway Trust Fund

The federal gasoline tax of 18.3 cents per gallon has not been raised since 1993. The diesel rate of 24.3 cents per gallon (diesel gets taxed more because heavy trucks cause more highway wear) has also been frozen at 1993 levels. Separately, 0.1 cent per gallon of the gas tax and 0.1 cent of the diesel tax go to the Leaking Underground Storage Tank (LUST) Trust Fund for petroleum cleanup.

The mechanism is elegant in design: fuel taxes are collected upstream at the terminal rack when fuel is removed from a refinery or pipeline terminal, not when you pull up to the pump. Registered entities (refiners, importers, terminal operators) are responsible for the tax at that point. The consumer price at the pump reflects this embedded tax plus state and local fuel taxes. In most states, total federal and state fuel taxes run 40–70 cents per gallon.

The gas tax feeds the Highway Trust Fund, which finances interstate highways and bridges through formula grants to states. Because fuel tax revenue has not kept pace with construction costs and improved vehicle fuel efficiency means fewer gallons burned per mile driven, Congress has repeatedly needed to transfer general fund money to keep the Highway Trust Fund solvent. The Infrastructure Investment and Jobs Act of 2021 supplemented the HTF with roughly $90 billion in general fund transfers.

Aviation Taxes and the Airport Trust Fund

Air travel carries several layers of federal excise tax. The 7.5% ticket tax on the fare you pay, plus a $4.50 per-segment fee for each takeoff-landing pair on domestic flights, funds the Airport and Airway Trust Fund. International departures and arrivals add $23.40 (2026). On a $300 round-trip domestic fare with two segments each way (four segments total), you effectively pay $22.50 in ticket tax plus $21.20 in segment fees — roughly $43.70 in federal excise tax alone, before airport facility charges (2026 rates).

Cargo shippers pay 6.25% on the amount they pay for freight transportation by air. Private aviation using piston-engine aircraft pays 19.3 cents per gallon on aviation gasoline; turbine-powered business aircraft pay 4.3 cents per gallon on jet fuel — a subsidy many observers find anomalous given that corporate jet users tend to be high-income individuals and businesses.

The Airport and Airway Trust Fund finances FAA operations and facilities, air traffic control, and capital grants to airports. When the FAA's reauthorization lapses (which has happened repeatedly), the excise taxes technically cannot be collected, creating funding crises.

Firearms and Ammunition: Pittman-Robertson Act

The Federal Aid in Wildlife Restoration Act of 1937 — universally called the Pittman-Robertson Act — was a pioneering user-fee system before "user fees" became fashionable. Firearms manufacturers and importers (regulated by ATF under federal firearms law) pay an 11% excise tax on the manufacturer's price of rifles, shotguns, and ammunition, and 10% on handguns. This is separate from the National Firearms Act tax on machine guns, suppressors, and short-barreled weapons. This money flows into the Wildlife Restoration Fund at the U.S. Fish and Wildlife Service, which distributes it to states based on land area and hunting license sales to fund wildlife habitat restoration and hunter education.

Because the tax is imposed on manufacturers and importers — not collected at retail — it applies even if the firearm is sold commercially at a loss or at very low margin. Manufacturers may pass it through in the price or absorb it. The Pittman-Robertson fund has distributed over $15 billion since 1939 and is widely credited with restoring white-tailed deer, wild turkey, and other species from near-extinction to huntable populations. Paradoxically, more firearms sold means more wildlife conservation money.

Sport Fishing and Archery: Dingell-Johnson/Wallop-Breaux Act

Fishing equipment is taxed at 10% of manufacturer's price under the Federal Aid in Sport Fish Restoration Act (commonly called Dingell-Johnson). The 1984 Wallop-Breaux amendments added motorboat fuel and small engine fuel used in boats. These revenues flow to the Sport Fish Restoration and Boating Trust Fund, distributed to states for fishery management, boater safety, aquatic education, and motorboat access facilities.

Similar logic applies: anglers who buy equipment pay into a fund that restores the fisheries they use. The excise tax on electric outboard motors is 3%, and on tackle boxes 3%. Fly fishing gear, snorkeling equipment, and similar items are taxed at 10%. Archery equipment — bows, arrows, arrow components, and broadheads — is taxed at 11% under a similar conservation funding arrangement.

Coal and the Black Lung Disability Trust Fund

Underground coal miners suffer from black lung (coal workers' pneumoconiosis) at high rates. Section 4121 funds the Black Lung Disability Trust Fund by taxing coal producers at $1.10 per ton for underground-mined coal and $0.55 per ton for surface-mined coal, capped at 4.4% of the sale price. This fund pays benefits to miners and their survivors when the responsible coal company is no longer solvent or cannot be identified. The trust fund has been chronically underfunded because coal production has declined while claims from the 1970s–1990s production peak continue.

Implementing Regulations

The IRS regulations implementing communications and transportation excise taxes live at 26 CFR Part 49 — Facilities and Services Excise Tax Regulations. Key provisions:

§ 49.4251-1 — Imposition of the communications excise: tax is imposed on amounts paid for general telephone service, toll telephone service, telegraph service, teletypewriter exchange service, wire mileage service, and wire and equipment service. The tax is imposed on the person who pays for the service (the subscriber), but is collected and remitted by the service provider. Prepaid telephone cards (§ 49.4251-4) are taxed when the card is transferred by the provider to the customer — the face amount of the card is the tax base.
§ 49.4251-2 — Rate of tax: the regulations reflect the historical 10% rate on all listed communication services; Congress subsequently reduced this rate to 3% on local and toll telephone service, which is the current effective rate. The tax as applied in practice is 3% on local telephone service (bundled local/long-distance plans included) and teletypewriter exchange service. The IRS issued a notice (2006-50) suspending collection on long-distance-only time-and-distance calls after federal courts held those calls did not meet the statutory definition; the 3% rate now applies primarily to flat-rate and bundled local service plans.
§ 49.4253-1 — Coin-operated telephone exemption: amounts paid via coin in a public coin-operated telephone for a single conversation are exempt from the communications excise. This exemption predates the near-elimination of public pay phones but remains in the regulations.
§ 49.4253-3 — Organizational exemptions: the American Red Cross, international organizations with intergovernmental status, and certain nonprofit educational organizations are exempt from the communications excise. State and local governments (§ 49.4253-12 cross-reference) are also exempt by statute.
§ 49.4253-4 — Combat zone exemption: telephone calls originating from a combat zone by members of the Armed Forces are exempt from the communications excise.
§ 49.4261-1 — Air passenger transportation excise: three separate taxes apply to domestic and international air travel: (1) 7.5% of the amount paid for taxable transportation (domestic fares); (2) $5.30 per domestic segment (2026) (each domestic takeoff-landing pair, regardless of fare); (3) international departure/arrival fee ($23.40 (2026) per international departure from or arrival into the U.S.). The 7.5% tax attaches when payment is made, not when travel occurs. Frequent flyer mileage awards redeemed for tickets are subject to tax — the tax base is the amount paid to acquire the award points, calculated by the airline (§ 49.4261-9).
§ 49.4261-3 — Payments made within the United States: the 7.5% and $4.50/segment taxes apply to amounts paid within the United States for transportation beginning and ending in the U.S. or in the "225-mile zone" (the portion of Canada or Mexico within 225 miles of the U.S. border). Flights from Seattle to Vancouver (under 225 miles from border) may be taxable; flights from New York to London are not subject to the 7.5% tax (only the international departure fee).
§ 49.4262-2 — Exclusion of international portions: the 7.5% ticket tax does not apply to the portion of any transportation that (1) is entirely outside the United States, (2) does not begin or end in the United States, (3) is not a part of "uninterrupted international air transportation," and (4) is not in the 225-mile zone. International connecting flights through a U.S. hub are complicated — IRS has issued rules on how to calculate the taxable domestic segment.
§ 49.4271-1 — Air freight waybill tax: a 6.25% tax on amounts paid for the taxable transportation of property by air; paid by the shipper and collected by the airline. Applies to shipments between U.S. points (including Alaska and Hawaii) and to international shipments paid in the U.S. Aircraft management services — amounts paid by aircraft owners to management companies for services like pilot staffing, maintenance, and storage — received a specific exemption under the Tax Cuts and Jobs Act (§ 49.4261-10 and § 49.4271-2).
§ 49.4281-1 — Small aircraft on nonestablished lines (air taxi exemption): amounts paid for transportation on aircraft with a maximum certificated takeoff weight of 6,000 lbs or less operating on nonestablished routes are exempt from the § 4261 passenger tax. Charter flights on small aircraft between nonfixed-route points (air taxis, sightseeing flights) typically qualify. Commercial scheduled airline service on small aircraft operating fixed routes does not.
§ 49.5000B-1 — Indoor tanning services excise tax: a 10% excise tax on amounts paid for indoor tanning services (ultraviolet radiation-emitting tanning beds and lamps), enacted as part of the Affordable Care Act effective July 1, 2010. The tax is imposed on the person paying for the service and collected by the tanning facility. Phototherapy services performed by licensed medical professionals are exempt. The tanning facility collects the 10% and remits on Form 720 quarterly. Revenue from this tax has declined as indoor tanning has fallen out of favor and tanning facilities have closed.

The compliance mechanics for Part 49 taxes: air carriers and communication service providers report and remit these taxes on Form 720 (Quarterly Federal Excise Tax Return), filed quarterly. Airlines must also file Form 7471 (Airline Use of International Air Travel Facilities) for international departure/arrival fees. Tanning facilities file Form 720. Communication service providers (telephone companies) collect from subscribers and remit on Form 720.

How It Affects You

If you're a driver, commuter, or trucker: The federal motor fuels excise taxes hit you every time you fill up — 18.3 cents/gallon on gasoline, 24.3 cents/gallon on diesel (diesel is higher because it funds both highway trust and an additional Leaking Underground Storage Tank cleanup fund). On a typical 15-gallon passenger car fill-up, that's $2.75 in federal fuel tax before your state's fuel tax stacks on top (state fuel taxes range from about 14 cents/gallon in Alaska to over 75 cents/gallon in California and Pennsylvania). For a truck driver filling a 150-gallon tank, the federal diesel tax alone is $36.45 per fill. These taxes haven't been adjusted for inflation since 1993 — 18.3 cents bought more road-building in 1993 than it does today, which is why the Highway Trust Fund has required repeated transfers from general revenue. If federal highway funding is on your radar (you're in construction, freight logistics, or transportation policy), the gas tax's purchasing power erosion is the core funding problem — and a vehicle-miles-traveled (VMT) fee is increasingly discussed as a replacement. Follow Highway Trust Fund solvency discussions at cbo.gov and transportation.house.gov.

If you're a frequent air traveler or booking business travel: Every domestic airfare already includes three separate federal excise taxes: 7.5% of the ticket price, $4.50 per domestic flight segment (each takeoff-landing pair), and an international departure/arrival fee of $23.40 (2026) for international flights. These show up as line items labeled "US Transportation Tax" and "US Segment Fee" on your itinerary or receipt. On a $300 round-trip domestic ticket with two segments each way (4 segments total), you're paying $22.50 in percentage tax + $21.20 in segment fees = $43.70 in federal excise before state and airport fees (2026 rates). Airlines also pay 6.25% on air freight, which is embedded in shipping costs for anything you order that moves by air. Frequent flyer miles redeemed for tickets are taxable — the airline calculates the tax base on the amount you paid to acquire the miles. If you're booking charter or air taxi flights on aircraft under 6,000 lbs on non-fixed routes, the passenger excise tax generally doesn't apply.

If you're a hunter, sport shooter, or firearms buyer: The Pittman-Robertson excise tax — 11% on rifles, shotguns, and ammunition; 10% on handguns — is embedded in the manufacturer's or importer's price before it reaches your gun shop. On a $500 rifle, roughly $55 in federal excise tax was paid before the gun ever reached the store shelf; the retailer marks up from the post-tax price. This money flows through the Wildlife Restoration Fund to state fish and wildlife agencies — distributed based on land area and hunting license sales — to fund habitat restoration and hunter education. Over $15 billion has been distributed since 1939. Paradoxically, firearm sales volume directly funds wildlife conservation: the more firearms sold, the more money flows to state wildlife programs. Check how your state spends its Pittman-Robertson allocation at fws.gov/service/wildlife-sport-fish-restoration-program.

If you're an angler, boater, or fishing gear manufacturer: The Dingell-Johnson/Wallop-Breaux Act taxes fishing tackle at 10% of manufacturer's price, motorboat fuel at the standard fuel excise, and electric outboard motors at 3%. These flow into the Sport Fish Restoration and Boating Trust Fund — used by states for fishery management, aquatic education, boating safety, and fish hatcheries. A $200 fly rod includes roughly $20 in federal excise tax. Archery equipment (bows, arrows, broadheads) is taxed at 11% under a parallel conservation funding arrangement. If you're a small manufacturer of fishing tackle or archery equipment, you file Form 720 quarterly and remit directly to the IRS. The FWS distributes Sport Fish Restoration funds to states at fws.gov/service/wildlife-sport-fish-restoration-program.

If you're a coal mine operator or a coal miner with black lung disease: The Black Lung Disability Trust Fund (26 U.S.C. § 4121) is funded by excise taxes on coal producers — $1.10/ton for underground-mined coal and $0.55/ton for surface-mined coal, capped at 4.4% of the sale price. This fund pays benefits to miners and survivors when the responsible coal company is insolvent or cannot be identified. The trust fund has been chronically underfunded because coal production has fallen while legacy claims from the 1970s–1990s production peak continue. If you're a miner or survivor with black lung claims and the responsible company has gone bankrupt, the BLDTF is your payer of last resort. File claims through the Department of Labor's Office of Workers' Compensation Programs (dol.gov/agencies/owcp/dcmwc). The Black Lung Benefits program paid approximately $500 million in benefits in FY2023.

State Variations

Every state adds its own fuel taxes on top of the federal rates, ranging from about 14 cents per gallon (Alaska) to over 75 cents per gallon (Pennsylvania, California). State fuel taxes may fund dedicated transportation funds or go into general revenue.

States do not impose independent firearms excise taxes. However, several states have enacted specific taxes on ammunition — Colorado (6.5% excise), Cook County Illinois, and others — that layer on top of the federal Pittman-Robertson tax. Illinois at one point had litigation over whether ammunition taxes burden Second Amendment rights; those cases have produced mixed results across circuits.

Pending Legislation

Fuel tax reform has been discussed for decades. One proposal replaces per-gallon fuel taxes with a per-mile Vehicle Miles Traveled (VMT) fee to better reflect road use regardless of fuel type, including electric vehicles that currently pay no fuel excise. Several states are piloting VMT programs. Federal VMT legislation has stalled repeatedly in Congress.

The Pittman-Robertson framework has been proposed as a model for electric vehicle users, who use roads but pay no fuel tax. Some proposals would impose a small excise on EV charging equipment or EV battery sales to fund highway maintenance. Excise tax provisions are a frequent target of budget reconciliation packages.

Recent Developments

OBBBA reinstated and expanded stock buyback excise tax — new 1% permanent: The One Big Beautiful Budget Act (OBBBA, 2025) made the Inflation Reduction Act's 1% excise tax on corporate stock buybacks (IRC § 4501) permanent and expanded it. The IRS finalized regulations (T.D. 9994, 2024) addressing several contested issues — including how to calculate the "netting rule" for RSU issuance against buybacks, and treatment of foreign private issuers. The stock buyback excise generated approximately $2 billion in revenue in its first year (FY2024), less than initial projections because companies restructured buyback programs, increased dividends (which aren't taxed), and used RSU netting to reduce the tax base.
FAA Reauthorization Act (2024) continued aviation excise taxes through 2028: The FAA Reauthorization Act of 2024 (Pub. L. 118-63) reauthorized aviation programs and extended the aviation excise taxes that fund the Airport and Airway Trust Fund — the 7.5% air transportation tax on domestic tickets, fuel taxes, and international departure/arrival taxes. The reauthorization resolved a period of repeated short-term extensions that had created planning uncertainty for airports and carriers. Aviation excise taxes contribute roughly $15–18 billion annually to the Trust Fund, which funds FAA operations, airport improvement grants, and ATC modernization.
Fuel excise and the renewable fuel transition — who owes what: The transition from petroleum to renewable fuels (biodiesel, renewable diesel, sustainable aviation fuel) has created significant complexity in federal fuel excise tax administration. The excise tax is imposed at the point of entry into the highway or aviation fuel supply chain (the "position holder" or "rack" system), but the blending of petroleum with renewable content changes who qualifies as the taxable party. IRS has issued multiple notices and regulations on biodiesel blender credit interactions with excise tax obligations; the Sustainable Aviation Fuel credit (IRA § 40B) creates additional interaction with aviation excise taxes that the IRS is still working through in published guidance.
Firearms excise tax — Pittman-Robertson fund at record levels from pandemic gun surge: The 11% federal excise tax on firearms and the 10% tax on handguns (26 U.S.C. §§ 4181-4182), which fund the Wildlife Restoration Program (Pittman-Robertson), generated record revenues during the 2020-2021 pandemic gun-buying surge. P-R Fund annual revenues exceeded $1 billion for the first time; state wildlife agencies received record formula payments for wildlife management and hunter education. As pandemic-era gun sales moderated (2022-2024), excise revenues declined from the peak but remain above pre-pandemic levels. The Pittman-Robertson Fund's connection between firearms excise taxes and conservation funding has made it one of the most politically durable federal conservation financing mechanisms.