An excise tax is a tax on a specific product, service, or activity rather than a broad tax on retail purchases generally. The federal government uses excise taxes to target things like gasoline (18.4 cents per gallon), cigarettes ($1.01 per pack), and firearms (10–11% of the wholesale price). Unlike the sales tax you see added at the register, an excise tax is usually collected from the manufacturer or importer and folded into the shelf price, so you pay it without ever seeing it itemized on a receipt.
The Two Structural Types
Excise taxes come in two forms. A specific excise tax charges a fixed dollar amount per unit: so many cents per gallon of fuel, so many dollars per pack of cigarettes. What you owe scales with quantity, not price. An ad valorem excise tax charges a percentage of the price instead, the way the 7.5% federal tax on domestic airline tickets does. Ad valorem taxes rise and fall with prices. Specific taxes stay flat until Congress changes them, which means they quietly lose value to inflation.
Governments impose these taxes for two broad reasons. One is as a user fee. The federal gas tax funds highway construction and transit, so drivers burning fuel on public roads pay for the roads they use. The other is as a deterrent, sometimes called a “sin tax,” meant to push up the price of harmful products and discourage consumption. Federal cigarette and alcohol taxes sit squarely in that camp. Some excise taxes serve both purposes at once, and the revenue is often earmarked for a specific trust fund rather than routed into general revenue.
What Federal Excise Taxes Apply To
Motor Fuels
Fuel taxes are the excise tax most people encounter regularly. Gasoline is taxed at 18.4 cents per gallon and diesel at 24.4 cents per gallon. Those rates have not changed since 1993 and are not indexed for inflation.1Congressional Budget Office. Increase Excise Taxes on Motor Fuels and Index Them for Inflation Nearly all of the revenue goes to the Highway Trust Fund, which pays for federal road work and mass transit.2Federal Highway Administration. Federal Highway-User Taxes, As of 2024 A sliver of 0.1 cent per gallon goes to the Leaking Underground Storage Tank Trust Fund. States add their own gas taxes on top of the federal rate, so the total per-gallon burden varies widely depending on where you fill up.
Tobacco and Alcohol
The federal cigarette tax is $1.01 per pack of 20, and the base federal tax on distilled spirits is $13.50 per proof gallon.3TTB: Alcohol and Tobacco Tax and Trade Bureau. Tax Rates Beer, wine, and other tobacco products each carry their own rate schedules. These are specific taxes, fixed per unit, so their real value erodes over time unless Congress raises them. State excise taxes on cigarettes and alcohol stack on top of the federal tax, and state rates vary considerably.
Air Travel
Flying commercially in the U.S. triggers several excise taxes that fund the Airport and Airway Trust Fund. The largest is a 7.5% ad valorem tax on the price of a domestic ticket. Each domestic flight segment (one takeoff and one landing) also carries a per-segment fee that starts at a $3.00 statutory base and is adjusted upward for inflation each year.4Office of the Law Revision Counsel. 26 USC 4261 – Imposition of Tax International departures and arrivals carry a separate per-person fee, $12.00 at the statutory base and also indexed annually. For 2026, the indexed international fee is approximately $23.40 per person. A connecting itinerary with two segments pays two segment fees, which is one reason a direct flight sometimes prices out lower than expected after taxes.
Firearms and Ammunition
The federal government taxes firearms and ammunition at the manufacturer or importer level. Pistols and revolvers are taxed at 10% of the wholesale price. Other firearms (rifles, shotguns) and all shells and cartridges are taxed at 11%.5Office of the Law Revision Counsel. 26 USC 4181 – Imposition of Tax The revenue flows to wildlife conservation programs under the Pittman-Robertson Act, a user-fee structure in which hunters and sport shooters fund habitat restoration and wildlife management.
Indoor Tanning
Since 2010, indoor tanning services have carried a 10% excise tax on the amount paid for the service.6Office of the Law Revision Counsel. 26 USC 5000B – Imposition of Tax on Indoor Tanning Services Unlike most excise taxes, this one applies at the point of sale, and the salon collects it from the customer. It was enacted as part of the Affordable Care Act and functions as a public-health deterrent, similar in philosophy to tobacco taxes.
Heavy Highway Vehicles
Trucks and other vehicles with a registered gross weight of 55,000 pounds or more are subject to an annual Heavy Vehicle Use Tax. The rate scales with weight. Vehicles between 55,000 and 75,000 pounds pay $100 plus $22 for every 1,000 pounds over 55,000. Vehicles above 75,000 pounds pay a flat $550 per year.7Federal Highway Administration. Heavy Vehicle Use Tax Heavy trucks cause disproportionate road wear, so they pay extra for the infrastructure they use.
Healthcare and Environmental Taxes
A few less visible excise taxes fall on businesses rather than consumers. Health insurers and self-insured employers pay the Patient-Centered Outcomes Research Institute (PCORI) fee, which funds comparative medical research. For plan years ending in 2025, the fee is $3.47 to $3.84 per covered life depending on when the plan year ends.8Internal Revenue Service. Patient-Centered Outcomes Research Institute Filing Due Dates and Applicable Rates The rate for plan years ending in 2026 had not yet been published at the time of writing. Separately, the Superfund excise tax applies to certain chemicals and imported chemical substances used in manufacturing, funding cleanup of hazardous waste sites.
Excise Tax vs. Sales Tax
The fundamental difference is scope. A sales tax applies to the retail sale of most goods and sometimes services, with limited exemptions. An excise tax targets a specific product (fuel, tobacco, airline tickets) and ignores everything else. Sales taxes are broad revenue tools. Excise taxes are targeted instruments.
The collection point creates a practical difference for consumers. Sales tax is added at the cash register and itemized on your receipt, so you see exactly what you’re paying. Excise taxes are typically collected from the manufacturer, importer, or wholesaler well before the product reaches you. By the time you buy a gallon of gas, the 18.4-cent federal excise tax is already embedded in the posted price. You pay it, but nothing on the receipt calls it out.
There is also a structural difference worth knowing. Sales taxes are exclusively state and local levies. There is no federal sales tax. Excise taxes exist at both the federal and state level. When you buy a pack of cigarettes, you may be paying a federal excise tax, a state excise tax, and a state or local sales tax, all stacked together.
Who Actually Files and Pays
For most excise taxes, the person legally on the hook is the manufacturer, importer, or service provider, not the end consumer. Businesses that owe federal excise taxes report them on Form 720, the Quarterly Federal Excise Tax Return, which is due four times a year.9Internal Revenue Service. About Form 720, Quarterly Federal Excise Tax Return Businesses with meaningful liability generally make semimonthly deposits between the quarterly filings, and all deposits move through electronic funds transfer.10Internal Revenue Service. Instructions for Form 720 (Rev. June 2025)
If you are a consumer buying gasoline, airline tickets, or cigarettes, none of that filing applies to you. You are paying the tax economically through a higher price, but the reporting obligation sits with the business up the supply chain.