How Are Electric Vehicles Taxed in Your State?

[eddiet1212]

How Are Electric Vehicles Taxed in Your State?

Note Data from 2023

How Are Electric Vehicles Taxed in Your State?​

September 20, 2023 4 min readBy: Benjamin Jaros, Adam Hoffe
U.S. states fund most of their road and infrastructure budgets with revenues from gasoline taxes. The historical rationale behind this is intuitive. The more people use public roads, the more gasoline they consume, making the gas tax a well-designed user fee.
The gas tax is often levied as a specific tax per gallon. While the commodity price of oil can fluctuate dramatically, the volume basis for the tax and citizens’ general dependence on gas for transportation have made the gas tax a stable source for funding roads. Gas taxes also serve as a disincentive to drive, decreasing both traffic congestion and pollution on the margin.
As the market share of electric vehicles (EVs) on the road grows, however, the gas tax’s ability to fund road projects and decrease traffic congestion erodes. Both federal and state real tax revenue per vehicle mile traveled has been on a steady decline for decades, creating a fiscal gap for road expenditures even as the demand for road infrastructure improvements has grown.
EVs produce lower emissions than traditional combustible-engine vehicles. Combining the fiscal gap with a desire to incentivize lower-emission vehicles, states have responded with a variety of tax policies.
The following map depicts states’ different approaches to incentivizing EV adoption and the imposition of higher registration fees for EV ownership.

Residents of all states are eligible to receive a federal tax credit of $7,500 for qualified EV purchases. Nineteen states offer an additional incentive beyond the federal credit ranging from a $1,000 incentive in Alaska and Delaware to a $7,500 credit in California, Connecticut, and Maine.
Contrary to a tax incentive, 24 states impose a higher annual vehicle registration fee for EVs and some hybrid vehicles to help offset forgone gas tax revenue. These fees range from $50 in Hawaii and South Dakota to $200 in Ohio, West Virginia, and Wyoming.
Five states offer both an incentive for the purchase of an EV and impose a higher registration fee for EVs than for combustible-engine vehicles. The table below summarizes details about these policies.
Another response by states to backfill reductions in gas tax collections has been to implement a tax on EV charging stations. Six recent state laws targeting EV charging stations include the following:

• Georgia will require stations to track kilowatt-hour usage and collect a tax for every 11 kilowatt-hours (effective January 2025).
• Iowa imposes a $0.026 per kilowatt-hour tax on public EV charging stations (effective July 2023).
• Kentucky will impose a tax of $0.03 per kilowatt hour on electric vehicle power distributed by an electric power dealer (effective January 2024).
• Montana imposes a tax of $0.03 per kilowatt hour or its equivalent on electric current from public electric vehicle charging stations (effective July 2023). Public charging stations already in operation have until July 2025 to install meters to collect the tax. To relieve the tax burden on in-state electric vehicle owners, B. 55 reduces electric vehicle registration fees by 30 percent starting in 2028.
• Oklahoma will implement an electric vehicle charging tax (effective November 1, 2023).
• Utah imposes a tax on retail sales of electric current from electric vehicle charging stations (enacted March 2023).

Higher registration fees and EV charging station taxes are an attempt to better connect vehicle miles traveled (VMT) to transportation and road funding, yet in some instances, they are implemented in conflict with policies aimed at increasing EV adoption. A simpler transportation policy solution would be a VMT tax.
A VMT tax is levied on the number of miles traveled by an individual vehicle. While there are privacy concerns with the administration of the tax, it could directly link the miles traveled to public road and infrastructure spending.
Two pieces of federal legislation—the Surface Transportation System Funding Alternatives Program (2015) and the Infrastructure Investment and Jobs Act (2021)—provided funding for states to run VMT pilot programs. Utah already has, and Hawaii will enact (effective July 2025), an annual per-mile road usage charge for EVs in lieu of the EV registration fee.
The state EV taxation landscape reflects the evolving transportation sector and the pressing need to address both fiscal gaps in road funding and environmental concerns. As the EV market continues to evolve and technology advances, it’s likely that these tax policies will also adapt.

How Are Electric Vehicles Taxed in Your State?

The state EV taxation landscape reflects the evolving transportation sector and the pressing need to address both fiscal gaps in road funding and environmental concerns.

taxfoundation.org

State Electric Vehicle Tax Credits and Registration Fees, in US Dollars​

Search:

Alabama	0	200	100
Alaska	1,000	0	0
Arizona	0	0	0
Arkansas	0	200	50-100 (a)
California	750-7,500	108	0
Colorado	5000	51.88	0
Connecticut	750-7,500	0	0
Delaware	1,000-2,500 (b)	0	0
Florida	0 (c)	0	0
Georgia	0	213.7	0
Hawaii	0	50	0
Idaho	0	140	75
Illinois	4,000 (b)	100	0
Indiana	0	150	50
Iowa	0	130	0
Kansas	up to 2,400	60-70	20-30
Kentucky	0	120	60
Louisiana	0	100	60 (d)
Maine	Up to 7,500 (e)	0	0
Maryland	3,000 (f)	0	0
Massachusetts	Up to 3,500	0	0
Michigan	0	145	52.5 (d)
Minnesota	0 (g)	75	0
Mississippi	(c)	150	75
Missouri	0	105	52.5
Montana	0	0	0
Nebraska	0	75	0
Nevada	0 (c)	0	0
New Hampshire	0 (c)	0	0
New Jersey	Up to 4,000 (b) (h)	0	0
New Mexico	0	0	0
New York	Up to 2,000	0	0
North Carolina	0	140.25	38.75
North Dakota	0	120	50
Ohio	0	200	200
Oklahoma	Up to 5,500	110	82
Oregon	Up to 5,000 (b) (e)	76-91	0
Pennsylvania	Up to 3,000	0	0
Rhode Island	Up to 2,500	0	0
South Carolina	0	60 (i)	30 (i)
South Dakota	0	50	0
Tennessee	0	100	0
Texas	0	0	0
Utah	0	130.25 (j)	56.5 (j)
Vermont	Up to 4,000	0	0
Virginia	2,500	120 (k)	0
Washington	0 (l)	150	75
West Virginia	0	200	100
Wisconsin	0	100	75 (d)
Wyoming	0	200	0

[th]

State​

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EV Purchase Tax Credit​

[/th][th]

Additional EV Annual Registration Fee​

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Additional Hybrid Annual Registration Fee​

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Notes:
(a) There is a $50 fee for standard hybrid, $100 fee for plug-in hybrid.
(b) Offers a rebate, not credit.
(c) There are local credits and/or rebates
(d) For plug-in hybrid vehicles only
(e) Varies by income level
(f) For purchase price under $50,000.
(g) The state offers an E-Zpass incentive (one time credit of $250 for full electric and $125 for plug-in hybrids)
(h) The EV purchase is exempt from sales tax. The rebate is $25 per mile of EPA-rated all-electric range up to $4000.
(i) Biennial supplmental license fees of $120 and $60, respectively.
(j) Instead of the EV fee, users can pay a road usage fee of 1 cent per mile driven.
(k) Fee is a function of average number of passenger vehicle miles driven in state
(l) Purchase is exempt from sales tax.

Source: U.S. News and World Report, State Statutes

 

[Latrant]

I moved a PHEV from PA to Ohio and could not believe the cost to register it. Of course, I got a $6,750 federal and $500 state tax credit (in PA) at the time I purchased it. It’s ridiculous to charge so much more for an EV.

 

[chucchinchilla]

The 2025 California registration fee for our ID.4 was $734. To compare, the registration fee for the [gas] A6 was $241 meanwhile the registration fees for our classic cars were $189 each. I guess the lesson here is if you really want to save money, electrify a classic car.

 

[Latrant]

The 2025 California registration fee for our ID.4 was $734. To compare, the registration fee for the [gas] A6 was $241 meanwhile the registration fees for our classic cars were $189 each. I guess the lesson here is if you really want to save money, electrify a classic car.

That is expensive. I paid $434 for a two year registration on the PHEV so I guess I shouldn’t complain. Gas is much cheaper, less than $100 per year in Ohio. I forget how little. I ‘bought’ the PHEV in PA for lower sales tax and changed jobs a year later to Ohio.

 

[THil08]

Love NJ for that Credit I will be getting in 2027. Sucks that registration is gonna be $290 by 2027

 

[Cranky Canuck]

I'm in Ontario so not a US state (and we never will be!) but we no longer pay any fees to register vehicles, gas or full electric.

We used to have a $5,000 federal EV rebate but that program was popular and ran out of funds earlier this year so it's closed for now.

 

[esc-f8]

I'd say most states have taxes and fees on electricity. I know we do here in MN. So, I'm already paying tax on the energy being consumed by my EV. That tax money is used wherever the state decides but, still a tax on energy directly proportional to my use of my EV. Adding an additional registration fee is ridiculous. A solution would be to allow that tax on electricity to flow into the maintaining of roads and streets. XCEL Energy knows exactly how much of the energy I'm consuming is for my EV charging.

The intangible benefit of EVs over internal combustion engine vehicles are in health benefits to everyone around and reduce expenses related to treating and managing respiratory illnesses.

With that, I'd say it is misguided at best to tax anything on EV consumption right now. Have to modernize the way infrastructure is funded (or underfunded, more like)

 

[eddiet1212]

I agree ... seems like double taxation.

 

[Mousehunter]

I have read elsewhere that Texas now has an additional registration and annual fee for EV's - Think it changed last legislative session. It is not overly harsh - maybe $200 initial and $75/year. It was roughly gauged on the state portion of the fuel tax for 10k miles a year. But we still effectively come out ahead given that there is no corresponding Federal EV tax to balance the Federal loss of the fuel tax.

Honestly, it would not surprise me if eventually it is a per mile based tax not unlike heavy commercial rigs and trailers have to pay.