Republicans in the US House of Representatives are seeking to charge annual registration fees on electric vehicles (EVs), hybrids and conventional vehicles as part of a budget reconciliation bill that includes a $5 trillion tax cut package.
The new fees of $200/yr for EVs and $100/yr for hybrids would apply in the fiscal year that starts on 1 October 2026, while all other vehicles would be subject to a $20/yr registration fee starting in 2031, according to draft text of the bill released today. Republicans say the fees would ensure owners of EV to pay their share of road upkeep, while also delivering revenue into the Highway Trust Fund, which has already required $275bn in congressional bailouts to stave off insolvency.
"The Trust Fund is broken," US House Transportation and Infrastructure Committee chairman Sam Graves (R-Missouri) said today. "Our reconciliation bill will take the first step towards fixing it, unlocking the path towards permanently fixing the Trust Fund."
The US collects most of its revenue for road upkeep through an 18.4¢/USG excise tax on gasoline and a 24.4¢/USG tax on diesel. Congress has not increased the tax in more than 30 years, causing the buying power of the tax to fall in half, while fuel-efficiency gains and EV sales have further eroded revenue. The Highway Trust Fund is facing about a $24bn/yr shortfall, according to federal budget estimates prepared in 2023.
Republicans estimate the new fees will provide about $50bn in revenue over the next decade, which would reduce a portion of the shortfall. But if the new fees take effect, EVs and hybrids could end up paying more into the Highway Trust Fund than conventional vehicles. The average light-duty vehicle consumed 492 USG of fuel in 2023, according to federal data, the equivalent of paying a federal fuel tax of $90/yr for gasoline and $120/yr for diesel.
Democrats say they support more funding for road maintenance but have raised concerns about the targeting of EVs, particularly when Republicans want to eliminate other EV subsidies through the budget packaging. Congress should consider the "full menu of options to ensure the solvency of the Highway Trust Fund", non-voting House delegate Eleanor Holmes Norton (D-DC) said at a hearing today.
House Republicans plan to unveil the text of their filibuster-proof budget bill in sections over the coming weeks and begin committee debate, before they bring the bill up for a floor vote as early as next month. More than 200 businesses and trade groups, in a letter today, urged Congress to retain the existing energy tax credits that are part of the Inflation Reduction Act.
In addition to the annual registration fees, the Transportation Committee's section of the budget bill would also rescind about $4.6bn in unspent infrastructure funding provided by the Inflation Reduction Act, including programs supporting the use of low-carbon materials in infrastructure, energy efficiency projects at federal buildings, and the use of alternative fuels for aviation.
