By Policy Manager Celia Kosinski, Campaigns Organizer Mary Linn, and Senior Communications Associate Liam Condon
As Congress’ work continues on the next surface transportation reauthorization package, a familiar proposal has once again emerged: new annual registration taxes on electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs). The latest proposal, passed by the House Transportation & Infrastructure Committee on May 22, 2026, would establish an annual federal EV tax starting at $130 in FY2027 and rising to $150 by FY2035, alongside a PHEV tax beginning at $35 and increasing to $50 by FY2033.
On average, drivers of gas-powered cars currently contribute roughly $70–90 per year in federal fuel taxes, collected at the pump through an 18.4 cent-per-gallon federal gas tax. Under the $130 starting value of the proposed new tax, EV drivers would pay approximately 45% more than drivers of gasoline vehicles. This bill frames a disproportionate tax on a minority of drivers as a solution for the long-standing Highway Trust Fund (HTF) insolvency crisis.
An Ineffective Solution to a Real Problem
Fuel prices rightfully remain a major economic and political issue. Energy security, affordability, and reducing exposure to global oil market volatility have become increasingly important priorities due to the ongoing war in Iran. But rather than creating a fuel-neutral framework that modernizes how transportation infrastructure is funded, the proposal singles out one technology and places additional costs on drivers who are increasingly choosing alternatives to gasoline.
When gasoline prices rise, policymakers discuss tax holidays and relief measures. But when drivers move away from gasoline entirely, Congress considers imposing new taxes. That raises an important question: are we solving the transportation funding problem or discouraging the transition to new technologies?
The HTF has faced insolvency for decades. The federal gas tax has remained unchanged since 1993 and has not been indexed to inflation. Concurrently, vehicles of all types have become more fuel-efficient. Estimates suggest the Highway Trust Fund faces a roughly $280 billion funding shortfall over the next decade. EV taxes would generate only around $40 billion over ten years, addressing less than 15% of the projected gap. Meanwhile, a five-month gas tax holiday of the kind Congress is actively considering would reduce HTF revenue by approximately $17 billion this year. Policymakers are proposing a contentious and punitive new tax structure that would only make a modest dent in the broader problem. This is not a durable long-term solution; it instead places a targeted burden on a group of consumers without addressing the underlying transportation funding problem.
Implementation of a national EV tax could also prove far more complex in practice than it may seem at first glance. States operate under different vehicle registration systems and administrative structures, meaning a new federally directed tax could introduce uncertainty around compliance requirements, collection mechanisms, reporting processes, and enforcement. There is also uncertainty about whether the proposal provides states with sufficient resources to successfully administer the program. Through the proposal, states may retain up to 1% of revenues for administrative costs; however, it remains unclear whether that amount would adequately support implementation. Notably, the proposal directs the Federal Highway Administration to conduct a study two years after implementation. Requiring states to establish and manage a new system by October 2027—before those implementation challenges are fully understood—could create additional burdens.
Conclusion
Transportation funding needs modernization. A sustainable transportation funding solution should be fair, durable, and technology-neutral. EV drivers should contribute their fair share, but policies should avoid disproportionately targeting or penalizing one technology over another. The question to ask is how we can create a single, simple, and fair system capable of adequately funding our nation’s transportation infrastructure now and in the future without targeting certain groups with punitive taxes. Congress has an opportunity through surface transportation reauthorization to deliver a lasting solution to transportation funding challenges. Adding new, punitive taxes to EVs creates additional inequities while leaving the core HTF funding issue unresolved. America’s transportation funding system has faced structural challenges for years, and EVs should not become the scapegoat for years of Congressional inaction.
The bill, having passed through the House T&I Committee, now heads to the House floor for a full vote; it will also have to pass through the Senate before being implemented into law, so now is the time to contact your lawmakers to say no to punitive EV taxes!