SBF 70 years logo
MenuMENU
SearchSEARCH

Fuel tax exemption must be protected

School bus operations have been exempt from the federal fuel tax since 1978. Keeping it that way is a key concern for many in the industry.

by Frank Di Giacomo
September 18, 2014
3 min to read


Congress knows how to keep us on the edge of our seats. That was the case in last year’s federal government shutdown. It was also the case this summer, when it was up to Congress to keep the U.S. Highway Trust Fund from going bankrupt.

On July 31, Congress passed a bill to keep the highway fund solvent until May 31 of next year. If not for that last-minute action, funding for highway construction projects would have slowed and then stopped in about a month.

While an infrastructure fiasco has been averted for now, legislators really only “kicked the can down the road” until next spring. Then, Congress will again have to decide whether to figure out a long-term funding plan or resort to another short-term patch for the Highway Trust Fund.

Perhaps the most prominent — and contentious — proposal to help adequately finance the highway fund is to raise the federal fuel tax. And that’s where it gets interesting for the school bus industry.

The Highway Trust Fund, established in 1956, finances construction of the nation’s highways, bridges and railways, and it supports mass transit. It does this primarily through the federal fuel tax, which since 1993 has stayed at 18.3 cents per gallon of gasoline and 24.4 cents per gallon of diesel.

School bus operations have been exempt from the federal fuel tax since 1978. Keeping it that way is a key concern for many in the industry.

The National School Transportation Association (NSTA) has long been lobbying to protect the fuel tax exemption for school buses. Becky Weber of Prime Policy Group, which works with NSTA, says that this was one of the top issues that NSTA members discussed with congressional representatives during their visit to Capitol Hill this spring.

Mike Martin of the National Association for Pupil Transportation says that “if someone’s costs go up, particularly as a result of increased taxes, their prices are likely to go up, too. That’s a practical reason school districts and their contract service providers should work together to protect the fuel tax exemption.”  

Charlie Hood of the National Association of State Directors of Pupil Transportation Services notes that “removing the exemption would eventually increase the cost of student transportation in those states that use contracted student transportation for some or all of their services.”

While the school bus exemption has been preserved for well over three decades, the dire situation of the Highway Trust Fund could pose a threat. Fuel tax revenue for the fund has declined in recent years as cars have become more fuel-efficient and the number of miles driven has decreased.

For Congress, increasing the fuel tax would be a politically dangerous move. But even if lawmakers don’t increase the fuel tax, they could still take away the fuel tax exemption for school transportation, which would not go far in shoring up the Highway Trust Fund but would be detrimental to the school bus industry.

Weber of Prime Policy Group adds: “The industry must be vigilant to ensure Congress is educated that the rationale for the federal fuel tax exemption for school bus transportation remains as valid today as it did when it was instituted.”       

Subscribe to Our Newsletter

More Safety

A blue and white graphic with text reading "2026 Safety & Operations Report" with an image of the cover of the report.
Safetyby StaffMay 4, 2026

Does Reliable School Transportation Boost Attendance? EverDriven’s Data Says Yes

The new data shows 99.99% incident-free trips and strong on-time performance, reinforcing how dependable transportation, especially for vulnerable student populations, can help districts combat chronic absenteeism.

Read More →
zonar system image
SponsoredMay 1, 2026

What Data Shows About Student Transportation in 2026

Driver shortages, safety expectations, and staffing limits define student transportation in 2026. New survey data shows how fleet leaders are responding.

Read More →
zonar system image
SponsoredApril 20, 2026

2026 State of Student Transportation Report

Student transportation teams are being asked to do more with less, facing driver shortages, rising costs, and increasing safety expectations. This report uncovers how fleets are adapting, where technology is making the biggest impact, and why student ridership tracking is emerging as a top priority. Download the report to explore the key trends shaping 2026 and what they mean for your operation.

Read More →
A close-up view of the top of a yellow school bus with “School Bus” signage and red lights, overlaid with a cracked-glass effect. Text on the image reads, “Multi-Vehicle Crash in TN Takes 2 Lives” and “March 27, 2026,” with the School Bus Fleet logo in the corner.
Safetyby Staff and News ReportsApril 17, 2026

2 Students Die in Tennessee School Bus Crash with Dump Truck

A Carroll County accident claimed the lives of two students and injured over a dozen others on a March 27 field trip for eighth graders at Clarksville-Montgomery County. A preliminary report adds new information to the story.

Read More →
A black, white, and red graphic with an image of Wisconsin political figures by a table and text reading "Legislative Roundup April 2026."
Safetyby Elora HaynesApril 17, 2026

School Bus Laws to Watch: Driver Shortages, EV Debates & Safety Upgrades

From driver shortage solutions in Tennessee and rural connectivity debates in Utah to new safety laws in Wisconsin and ongoing electric bus mandate discussions in New York and Connecticut, here’s the latest in school bus legislation across the U.S.

Read More →
Ad Loading...
A rendering of the 6th-generation Waymo Driver on Hyundai’s all-electric IONIQ 5 SUV
Safetyby Staff and News ReportsApril 9, 2026

Senate Report: Autonomous Car Companies Hiding Reliance on Remote Operators

Waymo’s self-driving vehicles are under fire again after repeated school bus passing violations, raising questions about safety, remote operators, and regulation.

Read More →
Children cross in front of a stopped school bus with its stop arm extended while a nearby vehicle waits, illustrating school zone safety and risks of illegal passing.
Safetyby News/Media ReleaseApril 9, 2026

Industry Suppliers Offer Distracted Driving Awareness Month Reminders

Distracted driving continues to pose serious risks in school zones, with new data and driver insights highlighting ongoing concerns and potential solutions to improve student and roadway safety.

Read More →
Graphic featuring a headshot of Michael Graham, Vice Chairman of the National Transportation Safety Board, wearing a dark suit and red tie against an orange gradient background, with “Leadership Update” and School Bus Fleet branding on the left.
Safetyby StaffApril 8, 2026

NTSB Names Michael Graham Vice Chair: Where He Stands on School Bus Safety

A former airline pilot has stepped into a new role at the independent federal agency, but where does he stand on issues like seat belts on school buses? Here’s what he’s said.

Read More →
Ad Loading...
Graphic with bold yellow background and red headline reading “A Split Second from Disaster,” alongside a photo of a freight train traveling down railroad tracks. Subtext reads, “What one incident reminds us about railroad crossing safety,” with School Bus Fleet branding at the bottom.
Safetyby Amanda HuggettApril 7, 2026

'A Train Is Coming': Florida School Bus Close Call Highlights Critical Railroad Safety Reminders

Two recent close calls at railroad crossings, a train clipping a bus and a rear-end crash, highlight why vigilance and training still matter. Here’s what happened and what to tell your own drivers.

Read More →