Gas Guzzler Tax

Demystifying the Gas Guzzler Tax: What You Need to Know

Understanding the Gas Guzzler Tax

The Gas Guzzler Tax is a levy imposed on cars in the United States that exhibit poor fuel economy ratings. Established in 1978 under the Energy Tax Act, this tax is intended to deter the production and purchase of fuel-inefficient vehicles.

How Does the Gas Guzzler Tax Work?

Vehicles subject to the Gas Guzzler Tax must achieve at least 22.5 miles per gallon (mpg) to avoid the levy. The tax amount varies based on fuel efficiency, ranging from $1,000 for cars slightly below the threshold to $7,700 for those significantly below. The tax is reported on IRS Form 6197 and displayed on the window sticker of applicable vehicles.

Which Cars Are Subject to the Gas Guzzler Tax?

Luxury and sports cars dominate the list of vehicles subject to the Gas Guzzler Tax. Models from brands like Aston Martin, BMW, Ferrari, and Rolls-Royce, as well as select American muscle cars like the Chevrolet Corvette and Ford Mustang, have been included.

How Fuel Efficiency Is Tested

The Environmental Protection Agency (EPA) employs standardized tests to measure vehicle fuel economy. However, adjustments are made to account for real-world driving conditions, known as in-use shortfall. Despite these adjustments, the Gas Guzzler Tax does not consider in-use shortfall, leading to potential discrepancies in reported fuel economy.

Challenges and Exemptions

Despite its intentions, the Gas Guzzler Tax faces criticism and challenges. The rise in popularity of SUVs and trucks, which are exempt from the tax, has limited its effectiveness. Loopholes and regulatory interpretations have further diminished its impact, resulting in relatively low tax revenues compared to overall vehicle sales.