
Image Courtesy of taxfoundation.org
As the number of electric vehicles on the road continues to grow, the debate over how to fund road maintenance is gaining urgency. Traditionally, gasoline taxes have served as the primary source of funding for roads and bridges, ensuring that drivers contribute to infrastructure upkeep. However, since electric vehicle owners do not purchase gasoline, they bypass these taxes entirely. With states already imposing annual fees to compensate for this loss and the Trump administration now considering a national EV tax, changes could be coming sooner rather than later.
The Highway Trust Fund, which finances federal highway and transit projects, depends heavily on fuel taxes. However, as EV adoption rises, the revenue generated from these taxes is shrinking. In Michigan alone, the Anderson Economic Group estimated that the state has already lost millions in gas tax revenue due to the increasing number of electric vehicles. What was once a small concern when EVs made up only a fraction of vehicles on the road has now become a serious funding challenge as their market share climbs above five percent.
Recognizing this problem, at least 39 states have already implemented annual EV fees to help offset the lost fuel tax revenue.
These fees vary widely, with some states like Hawaii charging around $50 per year while others, like Texas, impose fees as high as $200. These costs are often buried in vehicle registration fees rather than being as visible as gas taxes, making them less apparent to consumers. Studies such as the Anderson Economic Group’s fueling cost analysis factor these hidden fees into their calculations, while many government metrics, including the EPA’s fuel economy estimates, do not.
With declining gas tax revenue threatening the federal and state government’s ability to fund infrastructure, Republicans in Congress are now considering a national EV road tax. This aligns with President Trump’s broader rollback of Biden-era EV policies, which included eliminating EV sales targets and freezing funding for new charging infrastructure projects.
A national EV tax could take several forms, such as a per-mile fee where drivers are charged based on how far they drive, an increase in annual vehicle registration fees, or a tax on the electricity used for charging, either at public stations or through home charging systems.
This policy shift is happening now because, in the past, EV drivers made up such a small percentage of road users that the lost revenue was negligible. As EV penetration continues to increase, however, the impact on road funding has become more pronounced. Some policymakers argue that it is unfair for EV owners—many of whom are wealthier buyers—to avoid the road taxes that gas-powered vehicle owners must pay. The push for a national EV tax is now being framed as an issue of fairness rather than just revenue generation.
While supporters of an EV road tax believe it will ensure that all drivers pay their fair share for infrastructure maintenance, critics warn that such a tax could slow EV adoption and undermine efforts to reduce emissions. Some argue that penalizing EV owners could discourage consumers from making the switch, while others believe that road funding should be restructured entirely to move away from gas taxes in favor of more sustainable models, such as mileage-based fees for all vehicles.
Meanwhile, states are not waiting for federal action. Vermont recently increased its EV fees, joining a growing list of states that are adjusting taxation policies to reflect the changing automotive landscape. More states are expected to follow suit, highlighting a broader trend toward finding new ways to fund infrastructure projects as gas tax revenues decline.
The debate over EV road taxes is far from settled, and the coming months will likely bring more discussion at both the state and federal levels.
Congress will need to weigh the benefits of securing funding for roads against the potential impact of discouraging EV adoption. As more states implement or increase EV fees, the pressure to create a national solution will only grow. At the same time, legal and political challenges could arise if new taxes disproportionately target electric vehicles while leaving other fuel sources untouched.
So to Wrap up….
With infrastructure funding in flux and EV adoption accelerating, the question of how to fairly tax road use is becoming more urgent. The Trump administration’s move toward a national EV tax signals that the days of electric vehicle owners avoiding road taxes may soon be coming to an end. As policymakers navigate these changes, the balance between fairness, climate goals, and maintaining a reliable transportation network will be central to the discussion.
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