Moving Americans into the 21st Century
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TEA-21 - Transportation Equity Act for the 21st Century Moving Americans into the 21st Century |
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| TEA-21 Home | DOT Home | Fact Sheet Index |
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TRUST FUNDS AND TAXES |
Extension of Highway-user Taxes
Extends the imposition of highway-user taxes through September 30, 2005. These taxes consist of gallonage taxes on highway motor fuel and truck related taxes, including an annual tax on heavy vehicle use, a weight-based tax on heavy truck tires and a retail sales tax on truck and trailer sales. Each of these taxes, with the exception of 4.3 cents per gallon of the motor fuel taxes would have expired after September 30, 1999. [9002(a)]
With the exception of alcohol fuels, all tax rates and related exemption and refund provisions are extended at the rates in effect prior to TEA-21 enactment. [9002(a)&(b)]
The partial fuel tax exemption for gasohol and other alcohol fuels is extended through September 30, 2007 with a slight phase down of the exemption beginning January 1, 2001. [9003]
Transfer of Highway-user Taxes to the Highway Trust Fund
Generally, the deposit of amounts equivalent to the proceeds of the highway-user taxes in the Highway Trust Fund is extended through September 30, 2005. [9002(c)]
The Leaking Underground Storage Tank Trust Fund continues to receive 0.1 cent per gallon of the motor fuel tax through March 30, 2005 at which time the 0.1 cent levy terminates. [26 USC 4081(a)(2)(B) & (d)(3)]
The Mass Transit Account of the Highway Trust Fund receives an increased share of the motor fuel taxes—2.86 cents per gallon. The Transit Account receives smaller amounts on certain fuels which are taxed at reduced rates, including liquefied petroleum gases, liquefied natural gas, and methanol from natural gas. Both changes take effect retroactively to October 1, 1997, correcting and clarifying provisions of the Taxpayer Relief Act of 1997. [9002(e)]
The General Fund of the Treasury continues to receive 2.5 cents per gallon on gasohol and other alcohol fuels where the alcohol source is not natural gas or a petroleum product. The General Fund also receives 0.6 cent per gallon on 10-percent gasohol and other higher-ethanol blends where the ethanol source is not natural gas or a petroleum product. [26 USC 9503(b)(4)(E) & (b)(5)]
The Highway Account of the Highway Trust Fund receives the remaining proceeds of the motor fuel taxes and all of the proceeds from the truck related taxes.
Expenditures from the Highway Trust Fund
Authority to expend Highway Trust Fund monies for authorized purposes is extended through September 30, 2003. After that date, expenditures from the Trust Fund are authorized only to liquidate obligations made before that date. Any other expenditure will cause the cessation of deposits of highway-user taxes to the Trust Fund. [9002(d)]
Highway Trust Fund Operation
Cash balances in the Highway Trust Fund not needed for immediate expenditure will continue to be invested in securities of the U.S. Government, but effective October 1, 1998, interest earnings on such investments will no longer be credited to the Trust Fund. [9004(a)]
A one-time adjustment to the cash balance of the Highway Account of the Trust Fund will be made on October 1, 1998. The Account balance will be reduced to $8 billion with the remainder of the former balance being credited to the General Fund of the Treasury. No adjustment will be made to the Mass Transit Account balance. [9004(a)]
The Mass Transit Account will be subject to the same anti-deficiency test (the Byrd Test) as the Highway Account. [9004(d)]
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Fuel Type |
Effective Date |
Tax |
Distribution of Tax | ||||||||||
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Highway Trust Fund |
Leaking |
General |
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Highway Account |
Mass Transit Account | ||||||||||||
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Gasoline |
10/01/1997 |
18.4 |
15.44 |
2.86 |
0.1 |
- |
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Diesel |
10/01/1997 |
24.4 |
21.44 |
2.86 |
0.1 |
- |
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Gasohol (10% ethanol) |
10/01/1997 01/01/2001 01/01/2003 01/01/2005 |
13 13.1 13.2 13.3 |
6.94 7.04 7.14 7.24 |
2.86 2.86 2.86 2.86 |
0.1 0.1 0.1 0.1 |
3.1 3.1 3.1 3.1 |
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Special Fuels: |
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General Rate Liquiefied petroleum gas Liquefied natural gas M85 (from natural gas) Compressed natural gas (cents per thousand cu. ft.) |
10/01/1997 10/01/1997 10/01/1997 10/01/1997 10/01/1997 |
18.4 13.6 11.9 9.25 48.54 |
15.44 11.47 10.04 7.72 38.83 |
2.86 2.13 1.86 1.43 9.70 |
0.1 - - 0.1 - |
- - - - - | |||||||
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Truck Related Taxes — All proceeds to Highway Account | |||||||||||||
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Tire Tax |
0-40 pounds, no tax | ||||||||||||
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Truck and Trailer Sales Tax |
12 percent of retailer's sales price for tractors and trucks over 33,000 pounds GVW and trailers over 26,000 pounds GVW | ||||||||||||
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Heavy Vehicle Use Tax |
Annual tax: | ||||||||||||
Aquatic Resources Trust Fund
The transfer of motorboat gasoline and special fuel taxes and small engine gasoline taxes from the Highway Trust Fund to the Aquatic Resources Trust Fund is extended through September 30, 2005. [9002(c)]
The portion of the motorboat and small engine fuel taxes deposited to the Highway Trust Fund and then transferred to the Aquatic Resources Trust Fund is modified as follows [9005(a)]:
Authority to expend Aquatic Resources Trust Fund's Boat Safety Account monies for the Recreational Boating Safety program is extended through September 30, 2003. After that date, expenditures from the Trust Fund are authorized only to liquidate obligations made before that date. Any other expenditure will cause the cessation of deposits of highway-user taxes to the Trust Fund. [9005(b) & (d)]
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Fuel Type |
Effective |
Tax |
Distribution of Tax | ||
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Aquatic |
Leaking |
General |
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Motorboat and Small Engine | 10/01/1997 10/01/2001 10/01/2003 |
18.4 18.4 18.4 |
11.5 13 13.5 |
0.1 0.1 0.1 |
6.8 5.3 4.8 |
Other Provisions
The National Recreational Trails Trust Fund is repealed. The Trails Fund has never been used; the Recreational Trails Program is funded from the Highway Trust Fund. [9011]
The 5.55 cents-per-gallon deficit reduction tax on rail diesel is reduced to 4.3 cents per gallon effective October 1, 1998. [9006]
September 14, 1998