CBO describes excise taxes, examines trends in excise tax revenues, and provides information about the models it uses for its baseline projections of excise tax revenues.
Federal excise taxes are imposed on the production or purchase of specific types of goods or services. In 2025, revenues from those taxes were $106 billion—which was about 2 percent of total federal revenues and 0.3 percent of gross domestic product (GDP). Most revenues from federal excise taxes come from a few sources. In 2025, 88 percent of excise tax revenues came from highway taxes (largely taxes on fuel), taxes on tobacco and alcohol, aviation taxes, and the tax on corporate stock repurchases (or buybacks). The rest came from taxes on a diverse set of goods and economic activities.
About 70 percent of excise tax revenues are dedicated to trust funds and support specific categories of spending. For example, revenues from taxes on gasoline and diesel fuel are deposited into the Highway Trust Fund (HTF) and used to pay for highway infrastructure and transit projects. Revenues from excise taxes that are not dedicated to trust funds are deposited into the general fund of the Treasury.
In the Congressional Budget Office's baseline projections (which estimate what federal revenues, outlays, deficits, and debt would be if current laws generally remained unchanged), excise taxes decline relative to the size of the economy, and as a share of revenues, from 2026 to 2036. That is mainly because some of the largest sources of excise tax revenues are taxes that are imposed per unit, and those taxes are not indexed for inflation (that is, adjusted to account for changes in prices).
CBO generally projects revenues from each excise tax separately. To do that, CBO examines the historical relationship between collections of revenues from an excise tax source and economic and market data about relevant economic activities. Those historical relationships and forecasts of economic variables are then used to project receipts from each excise tax source. Certain rules and conventions govern how the baseline projection of excise tax revenues is formulated. For example, by law, the agency is directed to assume that expiring taxes dedicated to trust funds are extended at their expiring rate for the remainder of the 10-year projection period.
In this report, CBO describes excise taxes, examines trends in excise tax revenues, and provides information about the models it uses for its baseline projections of excise tax revenues, which inform the agency's projections of the balances of certain trust funds and its analysis of the distribution of federal taxes.
