What Cars Are Affected by the Gas Guzzler Tax?

Cars with 8- and 12-cylinder engines consume more gas

The "gas guzzler tax" is a federal excise tax applied to the domestic sale of new vehicles that do not meet certain fuel economy standards. It was enacted as part of the Energy Tax Act of 1978.

This law does not apply to trucks, SUVs, vans and station wagons. However, there has been talk in recent years in Congress to expand this tax to SUV owners. At the time the law was written in 1978, SUVs were not as popular as today. In 2014, data shows that SUVs and crossover vehicles surpassed sedans to become the most popular vehicle body style in the U.S.

What Constitutes a Gas Guzzler?

The levy of a gas guzzler tax is determined on a car's combined fuel economy, which is based on a 55% highway to 45% city fuel economy estimate from the Environmental Protection Agency. Since the enactment of the law, the gas guzzler tax only applies to passenger vehicles. Vehicles that get at least 22.5 miles per gallon of the combined highway to city mileage do not have to pay the gas guzzler tax.

Newer vehicles that fall under this category of consuming more gas are mostly 8- and 12-cylinder engine sports cars, like the BMW M6, Dodge Charger SRT8, Dodge Viper SRT and Ferrari F12, to name a few.

How Much is the Gas Guzzler Tax?

The tax rate is based on combined highway and city mileage per gallon. The rate can range from $1,000 for vehicles that get at least 21.5 mpg but less than 22.5 mpg all the way up to $7,700 for vehicles that get less than 12.5 mpg.

The IRS is responsible for administering the gas guzzler program and collecting the taxes from car manufacturers or importers. The amount of tax is posted on the window stickers of new cars—the lower the fuel economy, the higher the tax.

How Do SUVs Get a Free Pass?

SUVs and light trucks represented less than 25 percent of the vehicles on the road back in 1978 and were considered primarily work vehicles. Over the last four decades, the use of SUVs has substantially changed, but the law has not. In 2005, the Senate wrote an amendment to the law exempting limousines and kept SUVs exempt as well.

...vehicles defined in Title 49 C.F.R. sec. 523.5 (relating to light trucks) are exempt. These vehicles include those designed to transport property on an open bed (e.g., pick-up trucks) or provide greater cargo-carrying than passenger carrying volume including the expanded cargo-carrying space created through the removal of readily detachable seats (e.g., pick-up trucks, vans, and most minivans, sports utility vehicles and station wagons).

Additional vehicles that meet the 'non-passenger' requirements are those with at least four of the following characteristics: (1) an angle of approach of not less than 28 degrees; (2) a breakover angle of not less than 14 degrees; (3) a departure angle of not less than 20 degrees; (4) a running clearance of not less than 20 centimeters; and (5) front and rear axle clearances of not less than 18 centimeters each. These vehicles would include many sports utility vehicles.

--Senate Report 109-082 from the Highway Reauthorization and Excise Tax Simplification Act of 2005