Is the United States going to Tax Electric Vehicles?
While there have been proposals to pass a federal law to tax or generate extra revenue from electric vehicles currently no tax is in place to tax electric vehicles on the federal level. Meanwhile several states have implemented yearly fees usually on the yearly registration ranging anywhere from 50 bucks up to $200.
First some history
The Highway Trust Fund is what pays for our federal roads. It was established in 1956 as part of the Federal Aid Highway Act to finance the construction and the maintenance of the interstate highway system as well as other infrastructure such as bridges and tunnels. It is primarily funded through a federal fuel tax on gasoline and diesel. Many states also implement their own state tax on gasoline and diesel to maintain the state highway infrastructure, local roads and county roads within the state.
The problem with EV’s
Seeing as they don’t use gasoline EV’s are evading this tax used to fund our roads and highways. This problem is compounded by the fact that gas vehicles have gotten more fuel efficient in recent years, leading to the Highway Trust Fund having a decrease in revenue. This problem is leading legislatures to look at reforming the Highway Trust Fund and find new funding mechanisms for the fund.
What states implement a yearly registration fee?
The following states have a yearly registration fee added to electric vehicles.
- California: Annual fee of $100
- Colorado: Annual fee of $50
- Georgia: Previously had a tax credit for electric vehicle purchases but this was replaced in 2015 with a $200 annual fee.
- Hawaii: Annual fee of $50
- Idaho: Annual fee of $140
- Illinois: Annual fee of $100
- Indiana: Annual fee of $150
- Michigan: Annual fee of $135
- Minnesota: Annual fee of $75
- Mississippi: Annual fee of $150
- Missouri: Annual fee of $75
- Nebraska: Annual fee of $75
- North Carolina: Annual fee of $130
- Oregon: Annual fee of $110
- South Carolina: Biennial fee of $120
- Tennessee: Annual fee of $100
- Utah: Annual fee of $120
- Virginia: Annual fee of $64
- Washington: Annual fee of $150
- Wisconsin: Annual fee of $100
What federal legislation has been proposed?
In 2021 legislation called The Fairness for Every Driver Act was introduced by 3 republican senators John Barrasso, Pat Toomey, and Mike Lee. This legislation seeks to address the problem as listed above where electric vehicles and hybrids contribute little or nothing to the Highway Trust Fund.
The Fairness for Every Driver Act would charge electric and hybrid owns a fee based on how many miles are driven. This program would setup a federal user fee based on Vehicle Miles Traveled (VMT). The fee would be collected through a device installed in the vehicle or through other means such as odometer readings. Its currently unclear how often this fee would be assessed but most likely it would be a regular basis such as every week or month.
This is currently only a proposal and has not been voted on by the senate. Supporters argue that it would ensure that all drivers pay their fair share for the use of the roads, while opponents argue that it would unfairly penalize electric and hybrid vehicle owners and discourage the use of these vehicles.
Bonus fact what is the difference between a Highway and a Freeway?
While the terms Highway and Freeway are often used interchangeable they do have distinct meanings.
A highway is a public road that connects cities, towns, and other population centers. Highways can be two-lane or multi-lane, and they often have intersections with traffic signals, stop signs, or other types of traffic control devices. Highways can be maintained by the federal government, state governments, or local governments, and they may be funded through a variety of sources, including fuel taxes, tolls, and government appropriations.
A freeway, on the other hand, is a type of highway that is designed for high-speed, uninterrupted travel. Freeways typically have multiple lanes, limited access points, and grade-separated interchanges (overpasses and underpasses) that allow vehicles to enter and exit the roadway without disrupting traffic flow. Freeways are typically maintained by state governments or regional transportation authorities, and they are often funded through a combination of fuel taxes, tolls, and government appropriations.
In summary, while all freeways are highways, not all highways are freeways. Freeways are a specific type of highway that is designed for high-speed, uninterrupted travel, while highways can refer to a broader range of public roads that connect population centers.
