Office of Transportation EPA420-F-06-042
United States and Air Quality October 2006
Environmental Protection
Agency
Program
Overview
Gas Guzzler Tax
Manufacturers of new cars that fail to meet the minimum fuel economy
level of 22.5 miles per gallon (mpg) have to pay a "Gas Guzzler Tax."
The tax is intended to discourage the production and purchase of fuel
inefficient vehicles. This fact sheet explains what the Gas Guzzler Tax is
and how it is calculated.
Introduction
The Energy Tax Act of 1978 imposes a Gas Guzzler Tax on manufactur-
ers who sell cars that fail to meet certain statutory fuel economy levels.
This tax does not apply to minivans, sport utility vehicles, and pick-up
trucks. Congress did not impose a gas guzzler tax on these vehicle types
because in 1978, at the time the law was enacted, they represented a rel-
atively small fraction of the overall fleet of passenger vehicles and were
used more for business purposes than personal transportation. The tax is
collected by the Internal Revenue Service (IRS) and is normally paid by
the manufacturer or importer. The amount of the tax paid is displayed on
the vehicle's fuel economy label (the window sticker on new cars).
Calculation Technique
The Gas Guzzler Tax for each vehicle is based on its combined city and
highway fuel economy value. Manufacturers must follow U.S. Environ-
mental Protection Agency (EPA) procedures to calculate the tax. The
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calculation uses a formula that weights fuel economy test results for city
and highway driving cycles (the combined value is based on 55% city
driving and 45% highway driving). Fuel economy values are calculated
before sales begin for the model year. The total amount of the tax is
determined later and is based on the total number of gas guzzler vehicles
that were sold that year. It is assessed after production has ended for the
model year and is paid by the vehicle manufacturer or importer.
EPA and manufacturers use the same test to measure vehicle fuel
economy for the Gas Guzzler Tax and for new car fuel economy labels.
However, the calculation procedures for tax and label purposes differ,
resulting in different fuel economy values. This is because an adjust-
ment factor is applied to the fuel economy test results for purposes of the
label, but not for the tax. The adjustment is intended to help account for
the differences between "real-world" and laboratory testing conditions.
EPA conducts fuel economy tests in a laboratory on a dynamometer (a
device similar to a treadmill). Laboratory conditions can be different
from real world conditions for such parameters as vehicle speeds, ac-
celeration rates, driving patterns, ambient temperatures, fuel type, tire
pressure, wind resistance, etc. EPA studies indicate that vehicles driven
by typical drivers under typical road conditions get approximately 90
percent of the laboratory test-based city mpg value and approximately
78 percent of laboratory highway mpg value. This difference is referred
to as "in-use shortfall." To account for the in-use shortfall, the city and
highway mpg values listed in the Fuel Economy Guide and shown on
fuel economy labels are multiplied by 0.90 for the city test and 0.78 for
the highway test. However, the combined city and highway fuel econ-
omy that is used to determine tax liability is not adjusted to account for
in-use shortfall, so it is higher than the mpg values provided in the Fuel
Economy Guide (www fuel economy, gov^ and posted on the window
stickers of new vehicles.
Tax Schedule
The IRS collects the tax directly from the manufacturer or importer of
the vehicles. The following table shows the gas guzzler tax rates which
have been in effect since January 1, 1991. The manufacturer or importer
must pay this amount for each vehicle that doesn't meet the minimum
fuel economy level of 22.5 mpg.
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Combined fuel economy of: Amount
at least 22.5 mpg No tax
at least 21.5, but less than 22.5 mpg $1000
at least 20.5, but less than 21.5 mpg $1300
at least 19.5, but less than 20.5 mpg $1700
at least 18.5, but less than 19.5 mpg $2100
at least 17.5, but less than 18.5 mpg $2600
at least 16.5, but less than 17.5 mpg $3000
at least 15.5, but less than 16.5 mpg $3700
at least 14.5, but less than 15.5 mpg $4500
at least 13.5, but less than 14.5 mpg $5400
at least 12.5, but less than 13.5 mpg $6400
less than 12.5 mpg $7700
Lists of Gas Guzzler Vehicles from 1980 to the
current model year
Each model year, EPA identifies vehicles subject to the Gas Guzzler Tax.
These lists are available on EPAs web site at: www.epa.gov/fuelecon-
omy/guzzler. These lists should not be construed as "all inclusive" lists
and are not intended to replace the applicable IRS or EPA regulations.
The regulations take precedence should there be any discrepancies in this
information.
For More Information
You can access additional information at the following Web sites:
• Gas Guzzler Tax and Vehicles:
www.epa.gov/fueleconomy/guzzler
EPA Web site provides the lists of gas guzzler vehicles by model
year.
• IRS Publication 510 - Excise Taxes for 2005:
www.irs.gov/publications/p510/arQ2.htmltfdOe5481 (HTML)
www.irs.gov/pub/irs-pdf/p510.pdf (PDF^
Part Two, Chapter 5 - Manufacturers Taxes of this Internal Revenue
Service (IRS) publication details the payment obligations for the gas
guzzler tax.
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• IRS Form 6197 - Gas Guzzler Tax:
www.irs.gov/pub/irs-pdf/f6197.pdf
IRS form used to calculate the gas guzzler tax.
• EPA Regulations regarding gas guzzler tax compliance:
o 40 CFR § 600.314-01 Updating label values, annual fuel cost,
Gas Guzzler Tax, and range of fuel economies for comparable
automobiles. (PDF, 3 pages, 33K) = http://a257.g.akamaitech.
net/7/257/2422/08aug20051500/edocket.access.gpo.gov/cfr_
2005/julqtr/pdf/40cfr600.314-01 .pdf
o 40 CFR § 600.314-86 Updating label values, annual fuel cost,
Gas Guzzler Tax, and range of fuel economies for comparable
automobiles. (PDF, 1 page, 28K) = http://a257.g.akamaitech.
net/7/257/2422/08aug20051500/edocket.access.gpo.gov/cfr_
2005/julqtr/pdf/40cfr600.314-86.pdf
• Fuel Economy: www.epa.gov/fueleconomy
EPA's web site on fuel economy provides information on how EPA
determines fuel economy estimates, the regulations that govern fuel
economy testing and reporting, and fuel economy test data.
• Green Vehicle Guide: www.epa.gov/greenvehicles
EPA's Green Vehicle Guide provides consumers with fuel economy
and emission information for all cars and light trucks. Consumers
can use the Green Vehicle Guide to find the cleanest, most fuel-
efficient vehicle that meets their needs. Each vehicle is given an Air
Pollution Score and Greenhouse Gas score on a scale of 0-10, with
10 being the best. Users can look up individual vehicles or types of
vehicles to see how they rate.
• www.fueleconomy.gov
www. fuel economy, gov is the official site for fuel economy informa-
tion, including downloadable versions of the annual Fuel Economy
Guide, files of the annual underlying fuel economy data, as well
as much more information. Users can look up individual vehicles
for specific fuel economy information and read tips for improv-
ing gas mileage. There are links to related sites, including where
to find information about possible tax credits for alternative fueled
vehicles.
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