Texas Will Tax EV Registrations to Make Up for Lost Gas Taxes
Many states and municipalities are all-in on EVs, but the shift has some wondering how they’ll make up for the tax shortfall from falling gasoline sales. A popular solution that gets tossed around is to add a tax to EV registrations to help recoup the lost revenues, and Texas recently passed a new law to remedy the problem.
Governor Greg Abbot recently signed the law that will require EV owners to pay $400 upfront to register their vehicle and an additional $200 per year to renew it. The law goes into effect on September 1 and will contribute to Texas’ highway fund, just like the 20-cent per-gallon gasoline tax.
The new tax is expected to add at least $38 million to the state’s coffers, but as InsideEVs points out, that’s chump change compared to the almost $4 billion that gas and diesel taxes will bring in 2024. Texas has around 200,000 EVs on the road and is adding tens of thousands of new vehicles each year, so the EV tax total will rise with time, but it still has a long way to go before reaching anywhere near the tax revenues that gas and diesel generate.
While this might seem unfair to some EV owners, as it could feel like they’re being singled out for owning an electric car, it’s reasonable to expect all vehicle owners to pay their fair share for using the state’s highways. EVs need smooth roads just as much as any other vehicle, so everyone needs to chip in.
[Image: Kia]
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Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.
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Introduce a tax per kilometre travelled. Remove fossil fuel tax, tolls, yearly rego and insurance. Then tax a vehicle 50c per kilometre. If you drive 15 000k a year you pay $7 500. Still keep the incentives for buying EVs. But I think incentives should be introduced first to solar'ise a home with a battery. Hit the low hanging fruit first.
Pretty clear that the logical way to go is to tax per distance travelled times a vehicle gross weight multiplier, where the latter is tied to actual road wear data. Obviously, we'd need to scrap all gas and/or electrical charging taxes at the same time.**
This is only an EV issue b/c the traditional funding method of gasoline/diesel taxes is no longer appropriate.
** Seems reasonable to have a targeted fast charging tax if that tax is funding a specific government's effort to expand charging architecture.
I don’t disagree with having some mechanism to pay for the infrastructure that EVs share, but this tax seems a bit… high. Let’s do some napkin math.
The “average” driver racks up 12,000 miles a year (according to most lease agreements and warranties anyway). Lets suppose your gasoline car earns ~27mpg. In a year, you’d need 445 gallons of gas. With a $0.20 tax on each gallon, you’re paying $89 annually into that infrastructure fund.
But an EV owner is now on the hook for $400 up front and $200 annually?
To make that $200 annual tax comparable, your everyday gas guzzler would need to be averaging 12mpg! The only vehicles that get mileage that poor are oh right… Texas. Monster trucks or bust!
Why not simply eliminate a fuel tax and introduce a personal property tax tied to the value of the car instead? Everyone has the solution of putting a GPS box in the car. We all know that'll end badly once big gov decides they want to use that gps data.