Mythbusting: EV Drivers Don't Pay Road Taxes

Mythbusting: Electric Car Drivers Don't Pay Road Taxes

Electric cars recently surpassed a tipping point in the U.S., with new EV sales making up over 7% of the market, a milestone that signals the exponential adoption of high-tech, clean energy vehicles is on the horizon. As electric cars become more prominent in the U.S., EV skeptics are loudly raising a common concern: without the gas tax, how will EV drivers pay for the roads they use?

The Worry

Both state and federal infrastructure funds come from gas taxes that conventional car drivers pay at the pump. Electric cars never need to fill up. Does that mean they get to use the roads for free? Will gas car drivers be forced to subsidize electric cars?

The Truth

In fact, many states have implemented taxes and registration fees specifically to ensure electric vehicle owners contribute to highway funding. The issue has become a popular talking point, with politicians and others claiming these fees guarantee all drivers contribute equitably to infrastructure funding. However, a closer look at the electric and hybrid vehicle fees reveals the additional charges exceed what drivers typically pay in gas taxes. Drivers are being punished for choosing a cleaner energy alternative. Blaming electric cars for a lack of highway funding is a smokescreen intended to cover a problem decades in the making, a problem taxing electric cars cannot fix.

Thirty-three states levy additional fees for electric vehicles, usually in the form of an additional yearly registration fee. The fees vary state to state, with some states increasing the fees over time. Proponents claim the fees ensure all drivers pay to use and repair America’s roadways.

States with Fees on Electric Vehicles:

Nineteen states have additional fees on hybrid vehicles.

States with Fees on Hybrid Vehicles:

The Fees are Bigger in Texas, Too

Texas became the most recent state to enact an electric vehicle tax. Governor Abbott signed the bill, SB 505, on May 13th, with the law going into effect on September 1st. Supporters of the new tax claim it is a step toward fairness. The bill’s author, Sen. Robert Nichols said, “ This cost adjustment equalizes road use consumption between electric vehicles and gas-powered vehicles.” EV advocates say otherwise. Consumer Reports strongly opposed the bill, calling it “punitive.” A study from several Texas state agencies concluded a registration fee of $100 would be equivalent to the fuel tax paid by conventional vehicles. Consumer Reports determined the highest justifiable fee for Texas EV drivers is a mere $71.

Kara Kockelman, a transportation engineering professor at the University of Texas at Austin, said Texas is clearly falling behind on environmental protections and "fully behind oil and gas."

Gas Taxes: The History

But how effective is that system to begin with? Gas taxes have existed in the U.S. since 1919. The taxes were designed to cover the cost of building and maintaining roads, bridges, and tunnels. The more someone drove, the more fuel they purchased, and the gas tax would allow them to contribute proportionally to infrastructure funding. Unfortunately, those fuel taxes did not account for decades of improving fuel efficiency, nor have they kept up with rising costs and inflation. The federal gas tax hasn’t changed in 30 years. All of that means that the federal fund, the Highway Trust Fund, is failing and is on track to be insolvent by 2028.

In April 2021, the Congressional Budget Office estimated the cumulative shortfalls in the Highway Trust Fund’s accounts from 2022 to 2031 would total $195 billion. The bipartisan Infrastructure Investment and Jobs Act, though it heralds many positive changes throughout the U.S., increases the stress: if revenue and spending remain the same, the Fund’s shortfall by 2031 rises to $215 billion. Congress has been delaying the inevitable, transferring more than $150 billion from general revenues into the fund to keep it afloat, but lawmakers seem to lack the political will to make significant changes. Sen. John Cornyn of Texas said, “The current state of the Highway Trust Fund is unsustainable and unless something changes we’re going to be in dire straits—even more dire in just a few years.”

Electric cars are not the problem

Electric cars are not responsible for the existing shortfall in infrastructure funding. Creating additional taxes and fees for electric vehicles will barely make a dent in the problem and will actively discourage the adoption of clean vehicles. New solutions are needed if we want an abundant and equitable source of funding for America’s highways.

Fortunately, there are many alternatives to the current gas tax that would generate enough revenue to revamp our crumbling roadways:

If all those options prove unpopular with the general public, the federal government could take a measure supported by nearly 75% of Americans: implementing a carbon tax. Replacing the gas tax with a $20 per ton carbon tax would rake in about $300 billion, more than enough to replenish the Highway Trust Fund.

The United States has some of the best infrastructure in the world, but there is room for improvement. Everyone who benefits from our transportation system should contribute to its funding and maintenance. Electric car owners have a responsibility to pay their fair share for road use, but they shouldn’t be punished for choosing a clean energy vehicle. EV owners in many states are paying exorbitant fees, far beyond what conventional car owners pay in gas taxes. The gas tax system itself is failing to keep up with our infrastructure needs. We need a bold, new solution for infrastructure funding that is both equitable and helps us achieve our climate goals.

Don’t let anyone tell you EVs are the problem. EV drivers pay road taxes, too.