Texas bill pursues more revenue from electric vehicles and hybrids

November 16, 2020

Keith Goble


One Texas state lawmaker is trying again to add the Lone Star State to the list of states that collect additional revenue from owners of electric vehicles and hybrids.

Rep. Ken King, R-Hemphill, has filed a bill for consideration during the upcoming regular session to impose an additional fee for the registration and renewed registration of electric and hybrid vehicles.

The bill, HB427, would collect an additional fee of $200 for electric vehicles and $100 for vehicles that use a combination of fuel and electric power, or hybrid vehicles.

In 2019, King introduced an identical bill. The effort received a public hearing but the House Transportation Committee failed to advance the bill.

Collecting the additional fees is estimated to raise $55 million over the next two years for the state’s highway fund, according to a fiscal note.

The regular session convenes on Jan. 12.

Growing trend across country

As states continue to wait on the federal government to reach a transportation funding deal, elected officials at statehouses across the country continue to come up with their own solutions to help boost transportation funding. Among the trending options at statehouses in recent years is tapping alternative-fuel vehicles for additional revenue.

In an effort to encourage people to pursue more fuel-efficient options many states now offer financial incentives for hybrid and electric vehicle owners. According to the National Conference of State Legislatures, only about 1% of all light-duty car sales across the nation are for electric vehicles.

However, as popularity for such vehicles is anticipated to grow, state officials are concerned about the lost transportation revenue that results from fuel-efficient vehicles.

The NCSL reports that nearly half of all states impose additional fees for the registration and licensing of certain affected vehicles. Fees range from $50 annually to $250 annually.

Existing transportation revenue in Texas

The state of Texas collects a 20-cent-per-gallon excise tax on gas and diesel purchases. According to the Texas comptroller, the fuel tax generates about $3 billion annually.

The excise tax is not the lone source of revenue for roads. Another $1.38 billion annually in oil and gas severance tax revenue is routed to the highway fund. The fund also receives a portion of the state’s general sales tax and motor vehicle sales tax.

Specifically, up to $2.5 billion of net revenue annually is deposited into the highway fund from the state sales tax, after total sales tax receipts exceed $28 billion. The fund also receives 35% of state vehicle tax revenue above the first $5 billion collected.

A separate bill, HB207, was filed for the upcoming regular session. It would raise the excise tax by 2 cents per gallon.

The bill would also index the tax to the consumer price index. Each Jan. 1, the rate of the fuel tax would be increased or decreased by a percentage that is equal to the consumer price index percentage change for the preceding fiscal year. LL

More Land Line coverage of news from Texas is available.


Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.