States implement, increase electric, hybrid vehicle fees

States are accustomed to tapping the pocketbooks of truck drivers to help cover transportation funding needs. A growing trend in statehouses across the country is to look for additional funding from another source: electric vehicles and hybrid vehicles.

Multiple states have acted this year to turn toward owners of electric and hybrid vehicles to capture needed transportation revenue.

There are more than 32 states that impose a special registration fee for plug-in electric vehicles, according to the National Conference of State Legislatures. Most of those states also assess a fee for plug-in hybrid vehicles.

Fees range from about $50 annually for plug-in electric vehicles in Colorado, Hawaii and South Dakota to $225 yearly for plug-in electric vehicles in Washington.

Two states have already acted this year to increase fees for affected vehicle owners. As of July 1, two more states will add fees to help cover road maintenance needs.

Georgia

The state of Georgia is on the cusp of implementing a new tax on alternative-fueled passenger vehicles.

Starting the first of the month, a new law will tax electricity for electric vehicles. Currently, charging stations in the state charge for the amount of time spent at the pump.

The new law requires those drivers to pay for the kilowatt hour used. The change is described as similar to paying for fuel by the gallon.

The Georgia Department of Agriculture is required to regulate electric vehicle charging stations.

Stations are responsible for posting their prices. State inspectors are responsible for monitoring to make sure customers get the electricity they pay for.

Additionally, the new law adds a state excise tax of 2.84 cents. The revenue will be used to help pay for road work.

The $200 registration fee now paid annually by electric vehicle owners remains unchanged.

Montana

In effect the first of the month in Montana, a new rule supplements transportation funding via electric and hybrid vehicles.

Affected owners are being tapped to help cover costs for road upkeep and construction.

The new law charges electric vehicle owners from $130 to $340. The amount owed is based on vehicle weight.

Electric trucks in excess of 26,000 pounds will pay $1,100 annually. The fee amounts for hybrid vehicles range from $70 for vehicles under 6,000 pounds to $700 for vehicles in excess of 26,000 pounds.

A report from the Montana Legislative Services Division shows there were nearly 1,900 plug-in electric vehicles registered in the state as of January 2022. There were about 1,000 plug-in hybrid vehicles registered.

The Governor’s Office of Budget and Program Planning estimates vehicles covered in the new rule will increase by 30% annually.

The fees are estimated to raise nearly one-half million dollars annually by fiscal year 2025.

Texas

Texas will soon follow suit to raise road revenue via electric and hybrid vehicles.

Effective Sept. 1, a new law will impose an additional fee for the new and renewed registration of electric and hybrid vehicles.

An annual fee of $200 to be collected from electric vehicles. Vehicles that use a combination of fuel and electric power, or hybrid vehicles, will pay $100.

The new fees are estimated to raise an additional $280 million during the 2024-25 biennium, according to a fiscal note. They are applicable only to affected vehicles weighing up to 10,000 pounds.

While the bill was under review at the statehouse, supporters said that electric vehicle owners essentially receive a tax break by not paying the 20-cent state fuel excise tax. Taxes they do pay do not go into the road fund.

They added it is time to adopt the new fees because fuel tax revenues cannot keep pace with vehicle use and rising road construction costs. Additionally, supporters said that increasing popularity of more fuel-efficient and electric vehicles will only widen the gap.

Most of the revenue raised – 90 % – from the new fees will be directed to the state highway fund. Money in the fund can only be used for road and bridge work.

New fees already in place

Indiana and Tennessee are two states to already implement fees for new road revenue via electric and hybrid vehicle owners.

Indiana

The state of Indiana charges electric vehicle owners a $150 fee. Hybrid vehicle owners pay a $50 fee. The amounts are indexed every five years.

Revenue from the fees is routed to the state’s local road and bridge matching grant fund.

Gov. Eric Holcomb recently signed into law a bill that authorizes yearly rate increases using the annual index factor. Commercial vehicles registered in the state are exempt from the change.

The new law also includes an extension of the state’s annual fuel tax increase in place since 2017 through 2027.

The 6-year-old law called for rate adjustments through 2024. Adjustments made each July 1 are capped at one penny.

Tennessee

Tennessee Gov. Bill Lee signed into law a $3.3 billion bill that is touted to tackle transportation needs.

Among the methods of generating additional revenue included in the Transportation Modernization Act is raising fees on owners of all-electric vehicles. Affected vehicle owners now pay $100 annually.

The new law doubles the rate to $200 until 2027. At that time, the rate will increase to $274. The state will index the rate to inflation thereafter.

Hybrid vehicle owners have a new fee. The rate is set at $100 through 2027. Starting in 2028, the amount will be indexed.

Ongoing pursuits

Pursuits are ongoing in states that include Pennsylvania and Wisconsin.

In Pennsylvania, a bill moving through the Senate would replace the alternative fuel tax collected on noncommercial electric vehicle owners with a flat fee.

Currently, the state requires affected vehicle owners to file monthly statements with the Department of Revenue and to remit the alternative fuel tax on how much electricity their vehicle uses.

Sen. Greg Rothman, R- Mechanicsburg, said most electric vehicle owners do not adhere to the rule, or they are “inconsistent at doing so.” He cites “the cumbersome process or simply being unaware.”

His bill would exempt noncommercial electric vehicle owners from the tax and replace it with a flat annual fee of $290. Revenue would be sent to the state’s motor license fund for highway maintenance and construction.

“My legislation will simplify government for electric vehicle owners and ensure all drivers are contributing toward the maintenance of Pennsylvania’s roads and bridges,” Rothman stated.

As introduced, the bill included a $380 fee for owners of noncommercial electric vehicles. A $450 fee was included for owners of commercial electric vehicles.

Owners of commercial electric vehicles are no longer included in the bill.

SB656 has moved to the full Senate.

In Wisconsin, the legislature’s budget committee has voted to include in the upcoming budget an increased fee on electric vehicles.

The panel voted to raise electric vehicle registration fees from $100 annually to $175.

Critics say the added fees would discourage people from buying electric vehicles. Advocates counter that it is not unreasonable to ask affected vehicle owners to pay their fair share.

The new fees are estimated to raise $3.3 million over the next two years. Revenue would be deposited into the state’s transportation fund.

The budget proposal awaits further consideration at the statehouse. LL

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