Funding road infrastructure is a complicated business. Our current system of funding infrastructure through federal gas taxes has left the Highway Trust Fund (HTF) in need of billions in additional appropriations each year to remain afloat. While all drivers should pay their fair share for roads, relying on old policy strategies as our transportation system has massively expanded and evolved is not meeting our current needs and definitely won’t meet those needs in the future.
It’s time for a change. Congress can and should solve this problem once and for all by adopting a fuel-agnostic funding mechanism in the upcoming surface transportation reauthorization bill.
Electric vehicles (EVs) have increasingly become the punching bag for transportation funding challenges, often singled out as a solution to HTF shortfalls despite representing a relatively small share of vehicles on the road. In many states, policymakers have turned to EV-specific registration taxes as a politically expedient alternative to broader, more comprehensive funding reforms. At the federal level, bills have proposed everything from a $1,000 tax at the point of sale to proposals for annual taxes of $250.
However, the revenue these fees generate is modest at best. Typical state-level EV fees range from $100–200 per vehicle per year. Even in states with relatively high EV adoption, these fees generally generate only a few million dollars annually, often accounting for well under 1–3% of total state transportation revenues. For example, a state with 50,000 registered EVs charging a $150 annual fee would raise approximately $7.5 million per year—a small fraction compared to the hundreds of millions or billions needed annually for roadway maintenance, bridge repair, and system modernization. As a result, EV fees do little to meaningfully address long-term infrastructure funding needs, while disproportionately targeting a single vehicle class.
If a new $250 federal EV tax were passed, EV drivers in many states (such as Georgia, which has a state-level annual EV tax of $214) would pay nearly $500 each year in vehicle taxes.
The Transportation Funding Crisis
The way we fund our transportation infrastructure has been broken for decades. Historically, states and the federal government have primarily fed the HTF with gas tax revenue; however, because the federal gas tax has not been raised since 1993, real gas tax revenues have been falling for decades while costs rise alongside inflation, leading to a $40 billion gap between revenues and expenses by 2027, and a total deficit of $240 billion by 2033.
Despite clear evidence that most of this funding gap is due to the steadily improving fuel economy of our nation’s vehicles and the fact that the federal gas tax (and more than half of state gas taxes) are not indexed to inflation, legislators in many states have blamed a third, less impactful trend: the transition to EVs. As a result, rather than raising gas taxes, indexing them to inflation, or finding another way to raise funds, many states have attempted to bridge the gap by instituting annual EV fees, EV charging taxes, or both.
EV Fees: Asking Too Much From Too Few
We agree that EV drivers should pay their fair share toward road funding, but this approach is both inadequate and punitive. As explained by the Federal Reserve Bank of Chicago, even if the United States were to electrify 50% of new vehicle sales by 2030, “EVs would only make up about 12% of the vehicles in operation… so electric vehicles are not the main cause of declining motor fuel tax revenues for most states.”
With gas-powered vehicles guaranteed to remain the majority of on-road vehicles for a decade or more, any policy that fails to recapture the revenue lost due to inflation and efficiency gains will be inadequate at best, and actively harmful at worst. EV fees can serve as a stopgap measure to prevent further erosion of transportation infrastructure funding, but they are not a real solution: they merely trade one unfair and inadequate funding mechanism for another.
This is because EV fees are not only incapable of addressing insolvency, but also tend to saddle EV owners with a tax burden far higher than that of internal combustion engine drivers—creating an inverse incentive that decelerates EV adoption by encouraging people to drive less efficient gas vehicles. As identified in a Consumer Reports paper on EV fees, “Seven of eight electric vehicle fees instituted or increased so far in 2019 will be extremely punitive by 2025, meaning they not only far exceed gas tax-equivalent levels in those states, but also may unfairly discourage electric vehicle adoption.” In March 2024, New Jersey passed a statewide $250 EV registration tax, of which the first four years must be paid at the point of sale, increasing the upfront cost of every EV in the state by $1,000. These efforts are not limited to the state level. As mentioned above, in February 2025, Senator John Barrasso introduced a bill that, if passed, would have imposed a new $1,000 fee on all EV purchases nationwide.
States and the federal government should look for solutions to remedy declining gas tax revenues, but punitive fees that undermine other federal and state electrification incentives are not the answer. If implemented, EV taxes should align with—not exceed—the gas tax paid by drivers within the state. This calculation should utilize up-to-date average fuel economy data for efficient hybrids (to retain the incentive to drive clean vehicles) and must consider existing EV-specific costs (such as statewide electricity taxes) to ensure that all drivers pay their fair share without being unduly penalized for their choice in vehicle.
Comprehensive Alternatives
A range of strategies has been proposed to address the transportation funding gap. Below, we highlight several approaches under discussion at the federal level, many of which are also being explored by states. Each approach offers potential benefits and trade-offs, and, like most revenue-related policies, faces political headwinds. Still, the structural funding challenge they aim to solve cannot remain unaddressed.
Option 1: Mileage-Based User Fee
The first policy option replaces the gas tax with a technology-neutral mileage-based user fee (MBUF). This solution has several advantages: it would incur minimal physical infrastructure costs and standardize how all drivers contribute to road funding, reducing the system’s overhead and scaling payments to road usage. There would, however, be implementation costs related to tracking and verifying data. Different variations of this proposal call for measurement and reporting either via periodic odometer statements from drivers or automatically through a mobile application or transponder.
Option 2: Tax on EV Charging
The second policy option involves raising the gas tax, indexing it to inflation, and introducing a tax on EV charging. This approach has the advantage of mirroring the existing gas tax structure, making the change potentially more palatable for consumers. However, with most EV charging taking place at home, implementing a per-kWh tax on charging would require the expensive and logistically challenging installation of submetering on millions of at-home chargers. Sidestepping this challenge by limiting the tax to public charging would place the burden almost entirely on those without access to at-home charging, who are more likely to be low-income or live in disadvantaged communities.
Option 3: Infrastructure Access Fee
A third policy option is the removal of federal gas taxes, the federal excise tax on new trucks and trailers, and other HTF taxes, replacing them with a single weight-based “Infrastructure Access Fee” for all vehicles. The fee increases with a vehicle’s weight because weight is the primary factor in how much wear a vehicle imposes on the roads it uses. This approach has the added benefits of being easily implemented through existing collection methods and combining multiple taxes into one, reducing overhead and confusion by simplifying the tax system. This option could have a greater impact on heavier vehicles and disproportionately affect medium- and heavy-duty EVs.
What's Next
Increasing people’s taxes is never an easy task, but you can only kick a can so far down a road that’s filling with potholes. Though there is no perfect or politically convenient solution, there are multiple fair and viable pathways to secure a long-term source of funding for our nation’s transportation infrastructure. Our focus is on advancing a fair, fuel-neutral approach that sustainably addresses the transportation funding gap. Any viable framework should balance efficiency, fairness, and ease of use, minimize administrative overhead, avoid placing disproportionate burdens on specific populations, and ensure that funding mechanisms do not disincentivize the adoption of transportation technologies that benefit the public good.
Now is the time to act. Congress is drafting the next surface transportation reauthorization bill—a bill passed every five years that allocates funding for a wide range of transportation infrastructure and programs. We encourage Congress to take on the issue to ensure that it results in a real resolution to this decades-old dilemma. To learn more and get involved, subscribe to our newsletter or reach out to us directly at info@electrificationcoalition.org.