Car enthusiasts generally prefer vehicles with bigger, more powerful engines. However, these vehicles have a greater impact on the environment and economy because of their increased fuel consumption. To discourage this, the gas guzzler tax was enacted.
The Gas Guzzler Tax was introduced as a part of the Energy Tax Act of 1978. It aimed to discourage the production and purchase of fuel-inefficient vehicles by imposing an additional premium on them. This tax only applies to passenger cars with poor fuel-efficiency ratings and excludes vans, trucks, and SUVs because these vehicle types weren’t widely used in 1978.
If a vehicle’s combined city and highway fuel economy value is below 22.5 miles per gallon (MPG), then it will be considered a gas guzzler and the tax will be imposed on it.
Most cars made by high-end, exotic car manufacturers are typically considered gas guzzlers because they usually have large V8 or even V12 engines under their hood.
Every year, vehicle manufacturers are expected to compute the fuel efficiency values of their vehicles before they’re sold. Afterward, they will fill out the EPA’s requirements to establish the tax for each application model.
Once the amount is calculated, the manufacturer or importer will initially pay the gas guzzler tax to the Internal Revenue Service (IRS). The amount will then be charged to the person buying the car. The tax amount is recalculated after each model year’s production cycle, as it also takes into account the number of gas-guzzling cars sold in that year. Here’s a breakdown of the taxable amounts:
| Vehicle’s Combined Fuel Economy | Taxable Amount |
|---|---|
| Above 22.5 MPG | No Amount |
| 21.5 to 22.5 MPG | $1000 |
| 20.5 to 21.5 MPG | $1300 |
| 19.5 to 20.5 MPG | $1700 |
| 18.5 to 19.5 MPG | $2100 |
| 17.5 to 18.5 MPG | $2600 |
| 16.5 to 17.5 MPG | $3000 |
| 15.5 to 16.5 MPG | $3700 |
| 14.5 to 15.5 MPG | $4500 |
| 13.5 to 14.5 MPG | $5400 |
| 12.5 to 13.5 MPG | $6400 |
| Below 12.5 MPG | $7700 |
Minivans, trucks, and SUVs are excluded from the gas guzzler tax because at the time it was enacted, those types of vehicles were not very prevalent. However, times have changed and a majority of vehicles sold now (70% as of 2019) are either trucks, minivans, or SUVs. That they’re still excluded from the gas guzzler tax seems like an oversight by the EPA. This is especially true when you consider that probably all minivans, trucks, and SUVs have worse fuel economy than any passenger car available today, whether due to their bigger engines or heavier weights. At this point, it really doesn’t make sense that the tax still only applies to passenger cars.
The best way to legally avoid the gas guzzler tax is to avoid owning gas guzzlers in the first place. If you own or drive gas guzzlers, consider selling them to help pay for a new car. If you’re buying a new vehicle, look up its fuel efficiency rating. Avoid buying known gas guzzlers with powerful engines that consume lots of fuel.
If your prospective vehicle has a low fuel-efficiency score, there’s simply no way of avoiding the tax. However, recent advancements in engine technology have allowed even high-performance vehicles to avoid the tax altogether. An example would be the 2013 Ford Shelby GT500, which is exempt from the tax despite the 662-horsepower V-8 engine under its hood.
Other high-end, luxury vehicles that were notoriously known to come with a gas guzzler tax have improved their fuel efficiency as well, leading to reduced tax rates compared to earlier models.
Alternatively, you can drive vehicles that legally don’t count as gas guzzlers. SUVs, trucks, and vans are currently exempt from the Gas Guzzler law, although recent developments might change things.
The gas-guzzler tax might soon become irrelevant when it comes to disincentivizing the purchase of gas-guzzling vehicles. New fuel economy requirements have been set by the National Highway Traffic Safety Administration (NHTSA), requiring all new vehicles by 2028 to average 40 miles per gallon.
While there are many criticisms about the gas guzzler tax, its main purpose is clear. It discourages people from buying inefficient vehicles by making them even more expensive. However, given that the world is facing a climate crisis and the majority of vehicles sold in the US are SUVs, trucks, and vans, then the country might need a more comprehensive and up-to-date law to protect the environment. In the meantime, you can exempt yourself from paying the gas guzzler tax by avoiding gas guzzlers.
Any information provided on this Website is for informational purposes only and is not intended to replace consultation with a professional mechanic. The accuracy and timeliness of the information may change from the time of publication.