States Hitting EV, Hybrid Owners With More Taxes

May 4, 2022 3 min read
States Hitting EV, Hybrid Owners With More Taxes

Gotta pay for all those roads somehow…

We’ve all seen the smug personalized license plates on Teslas and other plug-in electric cars. Now you can laugh at the guy proudly displaying “GASLOL” knowing he’s paying an extra annual registration fee for the privilege of not burning gas. Many EV and plug-in hybrid owners aren’t happy about the extra money they have to shell out to the government, but it’s ostensibly for a good cause.

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Every time you fill up at the pump, you’re pumping money into the state and federal coffers. According to the U.S. Energy Information Administration, the federal tax rate on gasoline is $0.183 per gallon and $0.243 per gallon of diesel. Each state charges its own rate, with EIA claiming the average is $0.3102 a gallon for gas and $0.32.66 for each gallon of diesel. Depending on how much you drive and how fuel efficient your car is, that can add up. Per the Urban Institute, back in 2019 state and local governments collected $52 billion from fuel taxes.

The money collected through taxes on fuel is supposed to be used for road maintenance and improvement. However, state governments often dip into those funds for all sorts of other pet projects, some you might even think are good. For example, New York and New Jersey divert over a third of fuel tax money to fund public transportation services. So let’s all understand that these fuel taxes don’t strictly go toward the roads we all drive on – that’s just the pretense.

In a local news report I ran across, some EV owners were complaining that their local or state government has begun charging taxes at charging stations. Imagine that, the government finding new ways to get money from the citizenry! I mean, that’s just absolutely shocking (pun fully intended). It’s almost like the government is convinced it always needs more of your money so it can keep running ever less efficiently.

Of course, there is a federal plan to change all this. The infamous infrastructure law that was passed by Congress last year (jog your memory here) entails US Secretary of Transportation Pete Buttigieg figuring out a plan to track how far people drive, then taxing everyone based on miles driven every year. That would level the playing field between EV owners and everyone else, but it would mean people who live in rural areas or in the suburbs and tend to be lower income would be financially punished for their longer commutes to work. But hey, at least the Tesla owners won’t have to pay an extra registration fee, right?

Well, that might not be true. You see, once the government starts collecting money from people in a certain way, it often doesn’t just stop. For example, the income tax wasn’t a thing until the early 20th century. Some thought it would be just a temporary measure, especially considering it overlaps with retail and other taxes so people are being taxed on the same dollar twice, but it’s still kicking. So don’t expect the state or federal government to just drop fuel taxes, charging station taxes, or those extra annual registration fees. In fact, I wouldn’t be surprised if we start getting taxed on fuel, charging stations, and miles driven.

Sources: ABC 15, NCSL, EIA, Urban Institute, Reason Foundation

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