- Feds have proposed charging EV owners a $250 annual registration fee.
- The money is meant to address the lack of revenue collected from the gas tax.
- But, the cost represents the equivalent of buying nearly 1,400 gallons of gasoline—almost three times the amount the average commuter uses in a year.
If you drive a car with an engine, you’re putting 18.4 cents in Uncle Sam’s pocket with every single gallon of gasoline you pump. That money might seem like a drop in the bucket, but it’s critical to funding infrastructure projects like fixing potholes, patching bridges and even a bit of public transportation. The gas tax made up 81% of the $43.5 billion in revenue deposited into the Highway Trust Fund, the program used to pay for those projects, last year.
So if you’re one of those tree-hugging electric-vehicle drivers who dares to bypass the gas station entirely, the federal government has a message for you: it’s time to pony up $250.
On its face, that may seem fair enough—after all, gas car drivers are contributing to road repair and construction, so shouldn’t EV drivers? The reality, unfortunately, is far more complicated.
An Indecent Proposal
It’s the heart of a new proposal by Rep. Sam Graves, the Missouri Republican chair of the Transportation and Infrastructure Committee. His bill, set to be reviewed by the committee on Wednesday, proposes a federal registration fee for electrified vehicles—$250 for EVs and $100 for hybrids—plus a $20 charge for all vehicles beginning in 2031. Reuters reported the news this week.
Based on the Federal Highway Administration’s (FHWA) math, this seems to be based on the idea that the average American driver burns through about 550 gallons of gas each year. That means that the total out-of-pocket gas tax expense comes out to around $101.
Seems steep for EV owners, right? That’s because it is. Writing a check for $250 (actually up from the original proposal of $200) is the equivalent of paying for nearly 1,100 gallons of fuel at the current gas tax rate. It’s about twice what an average gas car burns in a year, and it’s not a one-time charge, either. It’s annual. This proposal would be the equivalent of the average commuter paying the $0.184 tax on 1,389 gallons of gasoline.
Interestingly, the bill exempts commercial and government vehicles from any registration fees. Meaning that rental car companies, Amazon’s delivery vans, and even those huge Class 8 Semis aren’t facing additional (or proportional) costs despite using the road system far more aggressively than the average commuter.
If passed, the feds appear to be handing off the collection responsibility to the state in which vehicle is registered, and forces its hand to collect the registration fee on its behalf.
Should a state decline to enforce the fee, the government will order the FHWA to withhold funding equivalent to 125% of the registration fees beginning in 2027. The bill itself doesn’t have an effective date of when it would go into effect (again, if it passes) but leans on the FHWA to establish the timeline around the development of a remittance process for the fees.
Photo by: Hyundai
The Ask Is Justified
Graves’ proposal doesn’t come without merit, and it goes down a bit easier than the $1,000 EV tax proposed by another Republican Senator earlier this year. After all, EVs aren’t paying into the Highway Trust Fund through the federal gas tax since, you know, they don’t need to fill up on fuel. Hybrids do, but a $100 annual registration is about the same as a regular gas car pays in while owners also pay at the pump. Roads don’t just fix themselves and the entire idea of paying into a shared pot of funds is to ensure you and I won’t blow out a tire on a pothole the size of the Grand Canyon.
EV ownership is continuing to rise as well. In fact, of the 292.3 million cars and trucks on the road in the U.S., approximately 4.1 million (1.4%) were electric. That’s about $415 million in lost tax revenue—and growing. At least 39 states have already begun to address their tax deficits by charging additional registration fees for EVs.
Here in Pennsylvania where I live, formerly home of the nation’s most expensive gas tax at $0.576, we’ll be paying a $200 EV registration fee for 2025 that will rise to $250 for 2026 and beyond. It’s the exact same cost as the federal proposal, but it’s more tolerable to pay because of PA’s already sky-high gas tax.
I’ve explained the math before, so let’s go over that explanation once again:
For you math nerds, here’s a simple equation: x=(C/A)*T:
X = Fair price
C = Annual average commute
T = Cost of gas tax (per gallon)
A = Average economyLet me explain:
The average fuel economy, according to the EPA, is 24.4 miles per gallon for passenger cars. Light trucks and vans yield a lower result of around 17.8 miles per gallon. The average commute across all drivers in the U.S. is 13,476 miles, so says the U.S. Federal Highway Administration.
If we plug all of those numbers into my equation, you’ll find that the “fair share” for Pennsylvania’s gas tax is actually $318, meaning that PA is undercharging drivers for the EV gas tax.
The state makes it up elsewhere, though. For example, through a $0.0151 tax per kilowatt-hour of electricity. With an average efficiency rating of 2.6 mi/kWh, the average EV will use around 5,183 kWh of electricity each year. This works out to around $78.27 in levied taxes, which brings PA’s 2026 and beyond taxes collected on EVs and its fuel source to $328.27—right around the same amount that is collected on a gas car.
As Radioactive As Chernobyl
I’m all for everyone paying their fair share. Yeah, yeah—I get it, many will mutter “taxation is theft” over just about anything. As much as I hate opening up my wallet, I’ll be the first to admit that I should pay the same amount to drive on the road as anyone else behind the wheel of a passenger car, regardless of what’s under the hood of their car.
That’s the just and equitable way of doing things. But this bill (and its justification) isn’t just or equitable, it’s punishing EV drivers for driving an EV and effectively subsidizing gas for owners who aren’t ready to make the jump.
Let’s dig into that a bit more by time-traveling back to 1993. Bill Clinton had just taken a seat in the Oval Office, Jurassic Park was breaking box office records and gasoline cost just $1.11 per gallon on average. That August, Clinton signed into law an omnibus bill that raised taxes $268 billion—part of the hike was through a $0.043 per gallon hike to the gas tax 30.5% from $0.141 to $0.184.
That raise sparked sharp criticism from politicians and the American people. In fact, the Clinton administration was even willing to discuss repealing the tax in 1996 after then-Sen. Majority Leader Bob Dole, who would also run for president, decided to make it a core issue as part of his campaign.
Ultimately, the repeal would be approved in the House but failed to pass the Senate and the gasoline tax increase remained in place.
It’s still in place, actually—and it’s been that way for 11,534 days, or 31.6 years. That’s the longest period in history since 1983, which had a stay on the gas tax since 1959 (23.5 years).
Adjusted for inflation, the 1993 levy on gasoline would actually cost $0.40 today, or more than twice what Americans are actually paying at the pump now. That being said, Graves’ gas tax hike would be fair if the gas tax were also increased to account for record- high inflation.
Rather than raise the gas tax, the government has instead slapped a big ol’ $275 billion Band-Aid on the Highway Trust Fund courtesy of America’s Checkbook—aka, the General Fund. That means you and I are still paying for the road repairs, just in a less transparent way.
Photo by: Tesla
Share The Road, Share The Load
All of this might make sense if the $250 registration fee for EVs reflected what the average ICE driver pays. The problem is that it doesn’t—it overshoots it by more than double. If fairness is the goal here, as Graves and company claim, then the math should reflect that. Basing a registration fee on the equivalent of nearly 1,400 gallons of gas when the average driver only uses 550? That’s not about equity—that’s about optics.
There’s a better fix here. Either lower the proposed EV and hybrid registration fees to reflect the road usage closer to that of an ICE driver at the existing gas tax rate, or do the thing that lawmakers are apparently afraid to say out loud: raise the gas tax. It’s unjust to offload the additional cost onto EV drivers alone instead of modernizing the tax system that built the roads to begin with.
Or, perhaps the better solution is a per-mile fee. Charging both retail and commercial operations for what they actually drive could translate into an even fairer representation of pulling their weight based. Sure, the driver who put 30,000 miles on their car paid more for their registration, but they also drove significantly more than the person who put just 3,000 miles on their ride. The biggest problem here is enforcing a per-mile tax, especially in states without annual inspections.
Hard doesn’t mean impossible, though. And until there’s some sort of political courage to overhaul the entire system, folks buying new car tech shouldn’t be saddling the brunt of the highway costs that were designed for a gasoline past. Fair should mean fair, and not only in name.
