Office of Transportation EPA420-F-04-021
and Air Quality September 2004
Program
Overview
Gas Guzzler Tax
Manufacturers of new model year 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 vehicles1. 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 for the sale of new model year cars with fuel economies that fail to
meet certain statutory levels. This tax does not apply to minivans, sport
utility vehicles, and pick-up trucks because when the Act was passed,
these types of vehicles constituted a relatively 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 Inter-
nal Revenue Service (IRS) and 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 the model type's city/
highway fuel economy values that are calculated at the beginning of the
model year, prior to introducing vehicles into commerce. Manufacturers
follow the U.S. Environmental Protection Agency's (EPA) procedures to
calculate the fuel economy figures that are used to determine the tax.
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The fuel economy is adjusted for differences in test procedures made
since the base year, which typically increase the calculated average fuel
economy value by 0.1 to 0.3 mpg. The combined city/highway fuel
economy that is used to determine tax liability is not adjusted to account
for in-use shortfall2, so it is higher than the mpg values provided in the
Fuel Economy Guide (www.fueleconomy.gov) and posted on the win-
dow stickers of new vehicles.
The total amount of the tax is paid by the vehicle manufacturer (or
importer) after production has ended for the model year and is based on
the total number of gas guzzler vehicles which were introduced into
commerce in the United States.
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 introduced into commerce in the
United States that doesn't meet the minimum fuel economy level of 22.5
mpg.
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
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Lists of 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 EPA's web site at: www.epa.gov/otaq/mpg.htm.
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 the Gas Guzzler Tax form (IRS Form 6197) on the IRS'
Web site at:
www.irs.gov/pub/irs-pdf/f6197.pdf
You can access documents on fuel economy on EPA's Office of
Transportation and Air Quality (OTAQ) Web site at:
www.epa.gov/otaq/mpg.htm
You can also contact the EPA OTAQ library for additional information
at:
U.S. Environmental Protection Agency
Office of Transportation and Air Quality Library
2000 Traverwood Drive
Ann Arbor, MI 48105
(734) 214-4311 and (734) 214-4434
Email: Group_AALibrary@epa.gov
'See the Energy Tax Act of 1978, Public Law 95-618, November 9, 1978, as amended
in The Tax Reform Act of 1986, Public Law 99-514, October 22, 1986
2The in-use shortfall is the difference between the EPA's laboratory-derived mpg
values and the fuel economy drivers actually get on the road. Laboratory conditions,
where testing is conducted on a dynamometer (a device similar to a treadmill), can be
quite different from real world conditions for such parameters as vehicle speeds,
acceleration rates, driving patterns, ambient temperatures, fuel type, tire pressure,
wind resistance, etc. EPA conducted a study and determined that real drivers in actual
conditions get approximately 90 percent of EPA's city mpg value and approximately
78 percent of EPA's highway mpg value. To account for this in-use shortfall, the city
and highway mpg values listed in 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).
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