Gas Guzzler Tax

What is the Gas Guzzler Tax?

The term “gas guzzler tax”, which was introduced under the provisions of Energy Tax Act 1978, is a federal excise tax applied only on the sale of new passenger vehicles that do not meet certain fuel economy standards (i.e. vehicles which have potential to consume more fuel than the standard requirement) and excludes trucks, SUVs and Minivans which are used for commercial purpose only.


  • The dictionary meaning of the word “guzzler” is a person who eats or drinks something greedily. Gas is a term used instead of various fuels across the world. Gas guzzler, thereby, means a car that consumes the fuel greedily. More consumption for a mile means low efficiency.
  • Gas guzzler is a tax on the sale of vehicles that have low fuel efficiency. It was introduced in the year 1978 by congress, with the primary purpose of discouraging the purchase of fuel-inefficient cars.
  • It applies to only passenger cars, and it is levied and collected by the Internal Revenue Service (famously known as “IRS”). The vehicle is subject to tax if it scores less then certain numbers of miles per gallon.
  • IRS is responsible for monitoring the gas guzzler program & collection of the tax for sale, use, or lease of cars. It is recovered from the car manufacturer or the importers and not from the ultimate buyers.
  • Manufacturers are required to submit the details in Form no—6197 to compute the gas guzzler tax payable.
  • The concept goes with the proverb “lower the fuel economy, higher the gas guzzler tax to be paid.” Now, fuel economy means the average number of miles an automobile travels on a gallon of gasoline or any other equivalent amount of other fuel, as determined by the Environmental Protection Agency (EPA).

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How Does it Work?

Calculation of Gas Guzzler Tax

Gas guzzler tax Example 1

The information is required to be submitted in Part I of the form number 6197 of the IRS. This form 6197 is attached to form 720. Part II of the form requires the manufacturer to submit details regarding the identification of the models which are subject to the said tax. Like in our example, the manufacturer should specify the exact model name, make, and model year of the 8 cars sold underline number 5 having a rate of tax $ 2100. The exact format is as below:

Line Number from aboveFuel Company Rate (i.e. mpg)No of VehiclesMake, Model name & Model Year


The most significant criticism is that the giant gas guzzler does not apply to light trucks. The reason is that the law was enacted way back in 1978, wherein light trucks & SUVs comprised of a mere 25% or even less than that. However, things changed with time. The use of SUVs has changed substantially over the past decades. But the law has not yet changed—the Older the law, greater the problems. A decade ago, an amendment was made to the law which exempts limousines, and SUVs were kept exempt.

Rates of Gas Guzzler Tax

If the mileage is at least 21.5 miles per gallon, then the rate of tax starts from $ 1000. However, if the mileage is less than 12.5 miles per gallon, the highest tax rate applies here is $7700. Also, for the buyer’s information, the said amount of tax required for a vehicle is posted on the window stickers of the said vehicle.

The tax rates are based on the range of miles per gallon. The rates are as follows:

Sr NoRange of Miles per Gallon (i.e. Fuel Company) Rate of Tax($)
ALess than12.5$7,700
BFrom 12.5 but less than 13.5$6,400
CFrom 13.5 but less than 14.5$5,400
DFrom14.5 but less than 15.5$4,500
EFrom 15.5 but less than 16.5$3,700
FFrom16.5 but less than 17.5$3,000
GFrom 17.5 but less than 18.5$2,600
HFrom 18.5 but less than 19.5$2,100
IFrom 19.5 but less than 20.5$1,700
JFrom 20.5 but less than 21.5$1,300
KFrom 21.5 but less than 22.5$1,000
LFrom 22.5 and above

So, if you just observe the above table, the rate is highest for a lower number of miles per gallon (i.e., $ 7700) per vehicle, and it is NIL for the highest possible miles per gallon. It proves the term “lower the fuel economy, higher the tax you have to pay.”


The world is moving towards efficiency-oriented techniques in every minute aspect. Today quality of the product is of utmost importance. Deriving the maximum out of the smallest things is essential. We need to accept the fact that fuel is a scarce resource in the world. Hence, acquiring the most out of least is required. Even when car engines are adjusted to consume fuel according to requirements, there are luxurious cars that consume more than needed. Hence, laws like energy tax are enacted to make good the loss caused to the environment by charging tax on its supply. But do things end here? Absolutely not. We need to find other methods such that human luxury does not affect the environment.

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