Americans nationwide have been reeling over spiked gas prices, which have sharply risen as a result of U.S.-Israeli military action in Iran and the closure of the Strait of Hormuz, a major oil shipping lane.
In Tennessee, residents face statewide average of $4.06 a gallon, according to the AAA (a 46% increase compared to last year), leaving many desperate for more relief at the pump. Diesel prices have nearly doubled compared to a year ago in Tennessee, from $3.40 a gallon in 2025 to the current state average of $6.20.
In the face of ever-increasing costs, some are now advocating for a a strategy that is simple in theory but may prove tricky to execute on the ground.
Can a tax holiday improve gas prices in Tennessee?
A tax holiday is what it sounds like: a temporary pause of the gas tax. Some states
have already considered it, including Massachusetts, where Gov. Maura T. Healey announced Sept. 22 legislation to suspend the state’s gas tax for two months. The bill is expected to cut gas prices by 24 cents a gallon statewide and impact both gas and diesel.
Georgia, whose state tax is about 33 cents per gallon, suspended theirs in late March, less than a month after the war against Iran began. The holiday, which was extended through June, saved Georgians almost $400 million in the first 60 days, according to MultiState, a government relations company.
It's not the first time this has happened, either. Florida did the same in 2022, when Gov. Ron DeSantis signed off on a month-long holiday. His stated goal was to remove 25 cents per gallon from consumers' receipts.
Tennessee Democratspreviously proposed a holidayin March, but it was dropped from the final state budget in April after facing pushback from Republican leaders.
Why some in Tennessee want to see a gas tax holiday?
The idea of tax holiday was floated recently in a Facebook group for Roane County, where prices in nearby Knoxville have reached $4.20 a gallon at some stations. For diesel, it's $6.18, a whopping 85% increase compared to last year.
In a Sept. 18 post made in the group, Gary Holder questioned why state and federal politicians hadn't pushed a holiday through.
"I’m a Republican, but I have to ask: What are we doing?", Holder wrote. "Governor Bill Lee—apparently you don’t support temporarily suspending Tennessee’s diesel tax or it would have been done."
"Diesel affects the price of nearly EVERYTHING we buy," Holder said. "This shouldn’t be a Republican or Democrat issue. It’s a Tennessee issue."
Are there any cons to a gas tax holiday in Tennessee?
The costs these holidays put on state governments is high, and in Tennessee, the cut would likely hinder hinder its ability to keep roads maintained.. A two-month-long gas holiday would lead to a $200 million loss in state revenue, according to researchers from the University of Pennsylvania. That money primarily funds highway maintenance, and around 45% goes to cities and counties for street upkeep, according to the Municipal Technical Advisory Service, a university-based agency that assists local officials in Tennessee.
Like Florida, New York also passed a holiday in 2022, when cost per gallon reached a $5 peak in June. However, an analysis conducted by the Institute on Taxation and Economic Policy, a non-profit think tank, showed that for every dollar the state lost on the holiday, less than 50 cents in savings made it to New Yorkers. Around a third of the benefits went to gas companies, with another 22% going to out-of-state residents.
Consumers in Florida faced a similar phenomenon, with drivers there receiving only 13 of the 25 cent saving they were promised, according to the Tallahassee Democrat.
Tennessee Representative Dan Howell, a Republican who sits on the House Transportation Committee, had doubts surrounding the holiday's funding and effectiveness when the issue came before the House in March.
"Eliminating the gas tax does nothing to benefit consumers," Howell told FOX 17. "It is completely unenforceable."
"Even if it could be enforced, which it cannot, it would come at a steep cost by draining critical funding for roads," Howell said.
This article originally appeared on Nashville Tennessean: Could a gas tax holiday lower costs for Tennessee drivers?
