The Congressional Budget Office (CBO)’s updated budget baseline includes new projections about the state of the Highway Trust Fund (HTF).
While CBO projects that the HTF will run a $340 billion deficit over the next 10 fiscal years (FYs), this is an improvement from a projected $410 billion 10-year deficit in the January 2025 baseline.
CBO previously assumed that the use of internal combustion engines would decline rapidly and reduce tax revenue from motor vehicle fuels that finance the HTF. A significant factor in CBO’s prior calculation was that the Biden Administration put forward onerous changes to Corporate Average Fuel Economy (CAFE) standards as part of a whole-of-government effort to force the adoption of electric vehicles.
The One Big Beautiful Bill Act (OBBB) defanged the CAFE rule by zeroing-out fines on vehicle manufacturers. In turn, CBO expects that fuel demand will now increase year-over-year rather than decrease, which improves tax revenues and the HTF’s solvency.
For the FY 2026 to 2035 period, CBO’s revenue projection for the HTF is now $82 billion higher than the previous estimate thanks to the OBBB.
