Electric Cars

Do Electric Vehicles Pay Road Tax?

Do Electric Vehicles Pay Road Tax?

It’s time to talk about everyone’s favorite subject: taxes! Okay, so taxes are probably everyone’s least favorite subject, but we all have to deal with them. As the old saying goes, only two things are certain in life: death and taxes.

While policies may vary from country to country, this article will only focus on the United States. It is possible that we may revisit the subject for other countries if our readers are interested.

What is a Road Tax?

A road tax is typically defined as a tax placed on a vehicle that needs to be paid so that it can be used on a public road. In the United States there is no federal road tax. Each individual state is responsible for determining what taxes to levy on new and used vehicle purchases. States also can and do impose yearly registration fees on vehicle owners that serve as a road tax. These taxes vary wildly from state to state. For example, California and New Hampshire charge a yearly registration fee according to the value of the vehicle. The state of New York charges yearly fees based on the weight of the vehicle.

The federal government does charge a highway use tax for vehicles with a gross weight to 55,000 lbs. or more. This class of vehicle typically includes trucks used for shipping and buses and will generally not apply to commuter vehicles.

What about Electric Vehicles (EVs)?

EVs are not exempt from sales taxes or registration fees in any state. The way EV owners save money on taxes is by not paying for gas. Each state imposes its own tax on gasoline, and tax rates differ from state to state. In Pennsylvania, that can be as much as 58 cents per gallon! This is on top of the 14 cent per gallon tax that the federal government charges. The electricity used to charge EV batteries is taxed however, but often at a much lower rate than gas.

In order to compensate for this loss of revenue at the pump, 17 states have levied additional taxes on EVs specifically. In order to justify these new taxes, proponents have noted that EVs use public roads just as much as their gas-powered counterparts. EVs create traffic and contribute to road degradation, why shouldn’t EV owners pay their fair share?

Going Forward

While no tax policy will ever please 100% of the population, there are some interesting developments in several states that suggest we may be moving towards equality for all drivers. Several states are now considering implementing a mileage tax in lieu of a gasoline or EV specific tax. California and Illinois have already conducted mileage tax pilot programs and Oregon is currently allowing 5,000 volunteers to pay a 1.7 cents per mile annual tax instead of a gas or EV tax.

If my state were to implement a similar tax, I would only pay about $44 per year instead of the $89 annual registration fee I currently pay. Now that’s a tax I can get behind!

What do our readers think about the future of vehicle taxes? Will most states eventually move towards a mileage tax model or will there always be separate taxes for EVs and traditional vehicles? What system is the most equitable for all drivers? Leave us a comment and let us know.

Source | Image: Wikimedia Commons

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Neil Brooks
Neil Brooks is an electric vehicle owner and lover currently based in the greater Washington D.C. area. Neil is a fan of all things electric and may be the only person in the Mid-Atlantic region of the United States to own both an electric leaf blower and an electric chainsaw. When he's not busy blogging about the latest on electric technology he enjoys grilling, rock climbing, and taking naps in his hammock.