1. The short answer
Fuel duty is a fixed-amount excise tax charged per litre or gallon of petrol, diesel or heating oil, separate from VAT or sales tax, which is charged as a percentage of the price instead. Because duty is a flat cents-per-litre number, it does not rise when crude oil does; a barrel of Brent at 104.18 US dollars on 17 September 2026 (Trading Economics) carries exactly the same duty per litre of refined fuel as one at 70 dollars. VAT works the opposite way and is the subject of the mechanics section below.
In the UK the tax is called fuel duty; in the US it is the federal and state motor fuel excise tax, 18.4 cents a gallon federally on gasoline and unchanged since 1993 (EIA FAQ, as of January 2026). Both sit on top of the wholesale fuel price described in our pass-through effect entry, and both are separate from any carbon tax layered on top in some countries.
2. The mechanic that matters: a fixed tax against a rising price
Because duty is fixed in cents or pence per litre, its share of a rising pump price actually falls during an oil shock, while VAT's share rises, since VAT is calculated on the full price including duty. If duty is a flat 50 cents on a 2-dollar litre, it is 25% of the price; on a 3-dollar litre the same 50 cents is only about 17%. VAT does the opposite: a 20% VAT charge is 40 cents on a 2-dollar litre and 60 cents on a 3-dollar litre, a tax rise "on top of" the price rise with no legislative change at all.
That is also why governments facing a price shock, as Spain and France have both done in 2026, tend to cut the fixed excise duty rather than VAT: a duty cut is cheaper for the treasury to reverse later and easier to target at one fuel, while a VAT cut is broader, fiscally larger and, inside the EU, more tightly constrained by EU VAT rules. Spain in fact abolished its reduced VAT rate on fuel entirely from 1 July 2026, moving back to the standard 21%, even while cutting excise duty in parallel (EY España, 1 July 2026); see the September table below.
3. UK and US fuel taxes, as of 17 September 2026
Both UK upstream taxation and US motor fuel excise taxes have stayed nominally unchanged through the 2026 crude price shock; only a proposed, unconfirmed US holiday would alter the federal number below.
| Tax | Rate | As of / date | Source |
|---|---|---|---|
| US federal excise tax, gasoline | 18.4 cents/gallon | unchanged since 1993, as of Jan 2026 | EIA FAQ |
| US federal excise tax, diesel (highway) | 24.4 cents/gallon | unchanged since 1993, as of Jan 2026 | EIA FAQ |
| US state average, gasoline | 33.27 cents/gallon | as of Jan 2026 | EIA FAQ |
| US state average, diesel | 35.50 cents/gallon | as of Jan 2026 | EIA FAQ |
| US average total tax, gasoline / diesel | about 51.7 / 59.9 cents/gallon | as of Jan 2026 | EIA FAQ |
| UK Energy Profits Levy (upstream production, not pump VAT) | 38%, on top of standard corporate tax, total burden about 78% | raised 1 Nov 2024, runs to 31 Mar 2030 | House of Commons Library, accessed 17 Sep 2026 |
No verified, primary-sourced UK fuel duty pence-per-litre figure or individual US state gasoline/diesel rate for 2026 could be confirmed for this table beyond the national averages above, so none is stated as fact here.
4. Why heating oil is taxed so much lighter than diesel, and what a windfall tax is not
Heating oil and diesel are chemically almost the same middle distillate, but taxed very differently, because heating oil is dyed and chemically marked so it cannot legally be burned in a road vehicle. A continental European example makes the size of the gap concrete: Germany taxes light heating oil at 6.135 cents/litre against 47.04 cents/litre for diesel, roughly an eighth (Zoll, accessed 17 September 2026); the UK and US, this page's regional focus, do not publish a directly comparable dyed-fuel duty schedule in the sources checked. Misusing marked heating oil as motor fuel is tax fraud in every jurisdiction that runs this scheme, which is the enforcement side of why the rate gap can exist at all.
It is also worth separating fuel duty from a windfall tax, a confusion that shows up often in September 2026 coverage: fuel duty targets the litre sold to a driver, while a windfall tax targets a company's profit, as our windfall tax glossary entry, this wave's sibling page, explains, using the UK's own 38% Energy Profits Levy as its example. A duty cut lowers your pump price directly; a windfall tax change, even if one were legislated, would not.
5. What this means for your fuel or heating bill
Tax rates change rarely and usually with advance notice, while crude oil and wholesale prices move every day, so a fuel tax page is only useful for timing your purchase around an announced change, never around a price forecast. The US federal excise tax has not moved since 1993, and the only currently discussed change, a federal gas tax holiday proposed for 1 June to 1 October 2026, remained unconfirmed as enacted through 17 September 2026 (Penn Wharton Budget Model, 11 May 2026); if it were confirmed, its window and end date would be public and datable, unlike where Brent will be next week.
In practice that means: if you hear that a specific duty change has a legislated start and end date, you can plan a purchase around it; if what you are hearing is a price prediction, including anyone's guess about where the current 104.18-dollar Brent (Trading Economics, 17 September 2026) is headed, you cannot. Our US heating oil buy now or wait guide and UK petrol and diesel forecast page apply that same tank-level logic regionally; run your own numbers in our household energy calculator.
See what today's tax and crude split does to your own fuel bill.
Run the calculator6. What fuel duty does not mean
Fuel duty is not the main reason pump prices spike during an oil shock, and it is not the same thing as a windfall tax on oil company profits. Because duty is fixed in cents per gallon or litre, almost all of a price spike like the one driving Brent to 104.18 US dollars a barrel on 17 September 2026 (Trading Economics) comes from the crude and refining market, not from any tax change; see our refining margin entry for the other side of that split.
A commonly repeated but unconfirmed claim in September 2026 US coverage is that the federal gas tax holiday proposed for June to October 2026 is already in effect; it was not confirmed as enacted as of this page's date, and Penn Wharton's own analysis assumed only partial pass-through to drivers even if enacted, about 72% for gasoline and 60% for diesel (11 May 2026). Nor should a heating oil price be compared directly to a diesel price without accounting for the tax gap between them, since the two carry very different duty rates for the same underlying fuel; see our heating oil price entry for that comparison done properly.