Why It Matters

Congress faces a growing revenue problem as fuel-efficient and electric vehicles erode the federal gas tax base, a Congressional Research Service (CRS) report, published July 2, shows. The BUILD America 250 Act would establish tiered annual registration fees of $130 for electric vehicles and $35 for plug-in hybrid electric vehicles, and at least 14 states have conducted voluntary vehicle miles traveled pilot programs.

Fuel economy has doubled since the 1970s, with model year 2024 light-duty vehicles averaging 27.2 miles per gallon compared to 13.1 miles per gallon in model year 1975. Electric vehicles, which consume no gasoline or diesel, now comprise approximately 1.6 percent of all light-duty vehicles on U.S. roads, with roughly 4.5 million in operation. Together, these trends mean less tax revenue per mile driven and growing numbers of vehicles paying nothing at all.

The Big Picture

States are already experimenting with stopgap measures, though results suggest they generate minimal revenue. Seven states levy charging taxes, with rates ranging from existing taxes to scheduled implementations. Utah's 12.5 percent public charging tax, the highest in the nation, raises less than $50,000 per month. Wisconsin's 3 cents per kilowatt-hour tax is projected to raise less than $286,000 per year. Georgia has scheduled a charging tax of 2.8 cents per kilowatt-hour to take effect in 2027, while Nebraska has scheduled a 3.0 cents per kilowatt-hour tax for 2028. 41 states have imposed special registration fees for electric vehicles ranging from $50 to $290.

The Infrastructure Investment and Jobs Act required the Department of Transportation to conduct a nationwide Vehicle Miles Traveled tax pilot program. At least 14 states have conducted voluntary vehicle miles traveled pilot programs using various methods of determining total miles driven, including manual odometer readings, smartphone apps, plug-in devices, and in-vehicle telematics. As of June, the Congressional Research Service found no evidence that the Federal Highway Administration had initiated the required nationwide pilot.

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