It now costs electric vehicle owners in Texas at least an extra $200 a year for the privilege of not pumping gas. A new law mandating additional registration fees for EV owners went into effect on Sept. 1. Now EV drivers must pay up to $400 when they first register their car, and an additional $200 ever year.
The surcharge, which is in addition to the $50.75 registration fee all car owners pay, is meant to offset revenue lost because EV drivers don’t pay the gas tax that helps fund road maintenance.
“As more of these vehicles drive on Texas roads, there are concerns about how they contribute to the funding of the roads which they use,” Republican state Sen. Robert Nichols, who sponsored Senate Bill 505, said in a statement.
The fee is expected to bring in at least $38 million in new revenue, according to the Dallas Morning News. That’s compared to the $2.8 billion motor fuel taxes are expected generate for the Texas Highway Department next year.
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Which states charge a fee for electric vehicles?
At least 33 states assess annual EV fees, according to the National Conference of State Legislatures, ranging from $50 in Colorado, South Dakota and Hawaii to up to $225 for some EV owners in Washington.
Texas joins Alabama, Arkansas, Ohio and Wyoming in charging EV owners $200, while the charge is Georgia is $211 a year.
Oklahoma has a tiered system based on vehicle weight, with $110 required for EVs under 6,000 pounds.
In 2019, lawmakers in Illinois proposed raising the fee for electric vehicles from $18 to $1,000, but the motion was ultimately dropped in favor of a $100 annual charge.
At least 19 states also require owners of hybrid vehicles to pay an additional registration fee. In some cases, the cost is the same as for an EV but typically, it’s significantly less — from $38 in Missouri to $100 in Alabama.
The full list of states with EV fees and their current rates can be found on the NCSL website.
Is it fair to charge EVs more for registration?
Proponents of assessing a fee for zero-emission vehicles point to the declining revenue generated by gas taxes. Newer cars have better fuel efficiency, which means most drivers are gassing up less frequently. The increased sales of electric vehicles — which are expected to top 1 million this year for the first time — factor in, as well.
“The problem the diversification of car fuels presents to this old system of road funding is that now the burden of paying for roads is shifting toward people who have internal combustion engines,” public policy analyst Rob Moore wrote in the Ohio Capital Journal. “This poses concerns for both equity (considering mostly wealthy people own electric cars now) and efficiency (considering those people can now free ride on payments being made by others).”
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Advocates also argue the additional fees EV drivers pay are offset by the tax breaks and other financial incentives they enjoy.
Douglas Shinkle, the NCSL’s transportation program director, said a flat user fee makes sense “from an equity perspective.”
“States recognize that this is an issue and they need to deal with it sooner rather than later,” Shinkle said at a 2022 conference, according to the Pew Charitable Trust.
In most cases, the money is required to go toward state transportation funds. But some states also use the revenue to support their electricity grid and other sectors that are impacted more by EVs. In Colorado, $30 of the $50 EV surcharge goes to the State Highway Users Tax Fund, while the other $20 funds public charging stations.
To make sure their fees keep up with inflation, California, Indiana, Michigan, Mississippi and Utah allow their rates to increase over time by tying them to the consumer price index or similar metric.
Why do people oppose extra EV registration fees?
The nonprofit Environment Texas calls the state’s $200 toll a “punitive fee,” pointing to research by Consumer Reports that suggests recouping lost gas taxes would only cost $71 per vehicle.
“The Texas Legislature is pouring sugar in the tank of the electric vehicle revolution,” Environment Texas Executive Director Luke Metzger said in a statement. “[It] will make it harder for Texans to afford these clean vehicles which are so critical to reducing air pollution.”
Critics of EV fees also say they’re often not commensurate: In Texas, for example, the gas tax is 20 cents a gallon. If you fill up your 15-gallon tank 40 times a year, that works out to about $120 in excise taxes — considerably less than the $200 lawmakers have assessed for electric vehicles.
“EV drivers are a small minority, and they’re easy to pick on,” said Chris Harto, senior transportation analyst for Consumer Reports. “Raising the gas tax is politically very challenging. But an exorbitant tax on cars that people consider luxury vehicles owned by the rich is very easy. And politicians can cloak it in the idea of fairness.”
Harto adds that, unlike a gas tax, a one-size-fits-all EV fee doesn’t take into account how much an individual drives.
“A ride-hailing driver with a Tesla who goes 50,000 miles a year pays the same amount as a low-income driver with a Nissan Leaf who only drives 3,000 miles a year back and forth to work,” he told CNET. “We’re not against these fees in principle. But there should be [vehicle-miles traveled] tax or user fee that accounts for the amount people drive — and that is applied equally to all powertrains — so you don’t have different people paying different amounts depending on the kind of energy they use.”
What other fees do states impose on EV owners?
Some states have either instituted or are considering programs that would allow drivers to be taxed based on the number of miles they drive, rather than a flat fee.
That would require either installing a device to measure mileage or having car owners report their mileage when they renew their registrations.
In Utah, the mileage-based user fee for EVs is a penny a mile. Even if your Tesla clocked 10,000 miles last year, you would end up paying less than the state’s $120 EV fee.
But Carl Davis, research director at the Institute on Taxation and Economic Policy, said moving to a wholesale mileage tax for all cars isn’t in the near future.
“That’s a tough thing to pull off without benefiting gas guzzlers relative to more efficient vehicles,” Davis told Pew.
Several states have also looked at taxing the electricity used at public charging stations. Iowa will begin levying a 2.6 cents-per-kilowatt hour tax on electricity delivered to EVs at public stations starting in July.
In 2022, Kentucky began levying a 3-cents-a-kilowatt hour tax to fuel up at a public charger. If the electricity is offered for free, as is done by some retailers, the station operator has to foot the bill.
A bill before Georgia Gov. Brian Kemp would add a 2.84 cents per kilowatt hour excise tax on EV charging, starting in 2025.
“We believe everyone using the public roads should be paying some fair share to get on that roadway,” state Senate Majority Leader Steve Gooch said in March, WABE reported.
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