New Fees on Hybrid and Electric Vehicles

Kristy Hartman and Kevin Pula 3/21/2019

Introduction

Almost 200,000 plug-in electric vehicles were sold in 2017—more than any other year in the U.S. electric vehicle market. This comes as several major automakers, including General Motors, Ford, Volvo and Volkswagen, made announcements expanding the development and production of plug-in and all-electric cars.

Electric Tesla vehicle charging. Current electric vehicle sales only represent about 1 percent of all light-duty car sales in the United States, but as sales continue to climb, there are concerns this may lower gasoline tax revenues. The repairs and improvements to the nation’s highways have traditionally been funded primarily through federal and state taxes collected at the pump. Electric vehicles pay the same registration fees imposed on traditional vehicles and some transportation-related taxes, but electric vehicles don’t require gasoline to operate, so they don’t contribute to the upkeep of highways through a gas tax.

Many states face declining gas tax revenue—not only because of electric vehicles—forcing state policymakers to consider other ways to pay for the nation’s transportation infrastructure. In 2017, state legislators considered more measures implementing new electric vehicle fees than any other action related to electric vehicles. As of October 2018, 21 states have enacted legislation requiring a special registration fee for select hybrid and plug-in electric vehicles, although Oklahoma’s legislation was subsequently struck down by the state Supreme Court, bringing the total number of states implementing fees to 20. These fees come in addition to standard motor vehicle registration fees.

States with Fees on Hybrid and Electric Vehicles

U.S. map showing states with fees on electric and hybrid vehicles.

US map showing state electric vehicle fees.

 

 

 

 

 

 

 

 

 

 

 

State legislation related to electric vehicle fees has increased in recent years, with Utah and Mississippi becoming the most recent states to pass measures. Nine states enacted new fees in 2017—California, Indiana, Minnesota, Oklahoma, Oregon, South Carolina, Tennessee, West Virginia and Wisconsin. Many of these fees are included in larger transportation funding packages, coming alongside increases in gas taxes, vehicle registration fees or other transportation-related revenues.

Oklahoma passed H.B. 1449 in 2017, but the state Supreme Court struck it down, concluding that the measure was a tax instead of a fee, and that it did not meet the constitutional requirements for passage of revenue bills. In a 6-3 ruling, the court determined the measure was unconstitutional because it failed to receive three-fourths of the legislative vote and it passed less than five days before the end of the legislative session, both of which are constitutional requirements for revenue-raising bills in the state.

Ten other states enacted fees in previous legislative sessions—Colorado, Georgia, Idaho, Michigan, Missouri, Nebraska, North Carolina, Virginia, Washington and Wyoming. The fees range from $200 for a plug-in electric vehicle in Georgia and West Virginia to $50 in Colorado and Wyoming. Some states also impose a fee for plug-in hybrid vehicles that operate on a combination of electricity and gasoline, as well as hybrid electric vehicles that aren’t recharged using electricity. The fee for plug-in hybrid vehicles is $47.50 in Michigan and $100 in West Virginia. Indiana includes plug-in hybrid vehicles and hybrid electric vehicles in its $50 annual fee. South Carolina is the only state without an annual fee, and instead requires a payment of $120 for all-electric cars and $60 for plug-in hybrid vehicles, once every two years.

In at least four states—California, Indiana, Mississippi and Utah—these special fees are structured to grow over time. Either tied to the consumer price index or another inflation-related metric, these states are striving to avoid the declining purchasing power of gas taxes due to years of fixed-rate structures.

States have yet to realize significant revenue collections from these special fees since the market share for hybrid and electric vehicles is still so small. Proponents support the fees to bring equity among drivers, attempting to get all drivers to pay for the use of roadways. If forecasted sales of hybrid and electric vehicles continue, states could see future revenue streams grow because of electric vehicle adoption and these new registration fees.

In addition to new fees, 34 states provide incentives for certain hybrid and plug-in electric vehicles, including purchase rebates, tax credits, HOV-lane access and free parking. Please see NCSL’s publication State Efforts to Promote Hybrid and Electric Vehicles for more information.

Hybrid and Electric Vehicle Categories

Hybrid and electric vehicles generally fall into the following categories:

  • Plug-in electric vehicles (PEV). This is a general term for any car that runs at least partially on battery power and is charged using electricity.
  • Battery electric vehicles (BEV). BEVs, such as the Nissan Leaf, run entirely on an electric motor and rechargeable battery. This is also referred to as an all-electric vehicle.
  • Plug-in hybrid electric vehicles (PHEV). PHEVs, such as the Chevrolet Volt, combine two propulsion modes in one vehicle. They have an electric motor and rechargeable battery, but can switch to gasoline once the battery power is depleted.
  • Hybrid Electric vehicles (HEV). HEVs, such as the Toyota Prius, use a gasoline engine with an electric motor. Although these vehicles have an electric motor and battery, they don’t plug in to be recharged.

State Bill Information

California

Cal. Vehicle Code §9250.6/SB 1 (2017)

  • $100 annual fee for a zero-emission vehicle, also known as a BEV, model year 2020 or later
  • Effective January 2021 and every year after, the fee will increase in accordance with the consumer price index.
  • “Zero-emission vehicle” means a vehicle that produces no emissions of criteria pollutants, toxic air contaminants and greenhouse gases when stationary or operating, as determined by the state board (subdivision (d) of Section 44258 of the Health and Safety Code).

Colorado

Colo. Rev. Stat. §42-3-304(25)(a)/HB 1110 (2013)

  • $50 annual fee for “plug-in electric motor vehicle,” also known as BEV and PHEV
  •  “Plug-in electric motor vehicle” means:
    1. A motor vehicle that qualifies under the federal definition (26 U.S.C. sec. 30D).
    2. Any motor vehicle that can be recharged from any external source of electricity and the electricity stored in a rechargeable battery pack propels or contributes to propel the vehicle's drive wheel.

Georgia

Ga. Code Ann. §40-2-151(19)(A)(i)/HB 170 (2015)

  • $200 annual license fee for noncommercial alternative fueled vehicles, including BEVs
  • $300 annual license fee for commercial alternative fueled vehicle
  • The fees will be automatically adjusted on an annual basis, as of July 1, 2016.
  • “Alternative fueled vehicle” means any vehicle fueled solely by an alternative fuel, including electricity.
  • The fees do not apply to PHEVs unless the vehicle owner elects an alternative fuel vehicle license plate.

Idaho

Idaho Code §49-457/HB 312 (2015)

  • $140 annual fee for electric vehicles, known as BEVs
  • $75 annual fee for PHEVs
  • “Electric vehicle” means a vehicle powered only by a form of electricity and “plug-in hybrid vehicle” means a motor vehicle with a hybrid propulsion system that operates on both electricity obtained through a rechargeable battery and traditional fuel.

Indiana

Ind. Code Ann. §9-18.1-5-12/HB 1002 (2017)

  • $150 annual fee for electric vehicles, known as BEVs
  • $50 annual fee for PHEVs and HEVs
  • The fee is indexed to the same inflation mechanism as the motor fuel tax.
  • “Electric vehicle” means a vehicle that is propelled by an electric motor powered by a battery or other electrical device incorporated into the vehicle and does not have a combustion engine.
  • “Hybrid vehicle” means a vehicle that draws propulsion energy from both an internal combustion engine and an energy storage device; and employs a regenerative braking system to recover waste energy to charge the energy storage device that is providing propulsion energy.

Michigan

Mich. Comp. Laws Ann. §257.801(7)/HB 4736 (2015)

  • $135 annual fee for “nonhybrid electric vehicles,” or BEVs, weighing under 8,000 pounds
  • $235 annual fee for “nonhybrid electric vehicles,” or BEVs over 8,000 pounds
  • $47.50 annual fee for certain HEVs up to 8,000 pounds
  • $117.50 annual fee for certain HEVs weighing over 8,000 pounds
  • These fees are indexed to the motor fuel tax. If the tax on gasoline is increased above 19 cents per gallon, the fees shall increase:
  • For BEVs, $5 per each 1 cent above 19 cents per gallon
  • For PHEVs, $2.50 per 1 cent above 19 cents per gallon
  • “Nonhybrid electric vehicle” means a vehicle that is propelled solely by electrical energy and that is not capable of using gasoline, diesel fuel or alternative fuel to propel the vehicle.
  • “Hybrid electric vehicle” means a vehicle that can be propelled at least in part by electricity and uses a battery storage system of at least 4 kilowatt-hours but is also capable of using gasoline, diesel fuel or alternative fuel to propel the vehicle.

Minnesota

Minn. Stat. Ann §168.013/HF 3 (2017)

  •  $75 annual fee for “non-hybrid electric vehicles,” or BEVs  
  • "All-electric vehicle" means an electric vehicle that is solely able to be powered by an electric motor drawing current from rechargeable storage batteries, fuel cells or other portable sources of electrical current. All-electric vehicle excludes a plug-in hybrid electric vehicle.

Mississippi

Miss. Code Ann. §§27-19-1 et seq./HB 1 (2018 First Extraordinary Session)

  • $150 fee for electric vehicles
  • $75 fee for hybrid vehicles
  • Beginning July 1, 2021, fees will be indexed to inflation
  • “Electric vehicle” means a vehicle that is powered solely by an electric motor drawing current from rechargeable batteries, fuel cells or other portable sources of electrical current, is manufactured primarily for the use on public streets, road and highways and is required to have a license tag under Miss. Code Ann. §§27-19-1 et seq.
  • “Hybrid vehicle” means a vehicle that uses more than one form of onboard energy to achieve propulsion, is manufactured primarily for use on public streets, roads and highways and is required to have a license tag under Miss. Code Ann. §§27-19-1 et seq.

Missouri

Mo. Ann. Stat. §142.869/SB 619 (1998)

  • $75 annual fee for alternative fueled passenger motor vehicles
  • $37.50 annual fee for PHEVs
  • “Plug-in electric hybrid” means any hybrid vehicle made by a manufacturer with a model year of 2018 or newer, that has not been modified from the original manufacturer specifications, with an internal combustion engine and batteries that can be recharged by connecting a plug to an electric power source.

Nebraska

Neb. Rev. Stat. §60-3,191/LB 289 (2011)

  • $75 annual fee for alternative fuel vehicle
  • “Alternative fuel” includes electricity, solar power and any other source of energy not otherwise taxed under the motor fuel laws as defined in section 66-712 which is used to power a motor vehicle. Alternative fuel does not include motor vehicle fuel as defined in section 66-482, diesel fuel as defined in section 66-482 or compressed fuel as defined in section 66-6,100.

North Carolina

N.C. Gen. Stat. §20-87(13)/SB 402 (2013)

  • $100 annual fee for plug-in electric vehicles
  • “Plug-in electric vehicle” means a four-wheeled motor vehicle that meets each of the following requirements:
  • Is made by a manufacturer primarily for use on public streets, roads and highways and meets National Highway Traffic Safety Administration standards included in 49 C.F.R. § 571.
  • Has not been modified from original manufacturer specifications with regard to powertrain or any manner of powering the vehicle.
  • Is rated at not more than 8,500 pounds unloaded gross vehicle weight.  
  • Has a maximum speed capability of at least 65 miles per hour.
  • Draws electricity from a battery that has all the following characteristics:
    • A capacity of not less than four-kilowatt hours
    • Capable of being recharged from an external source of electricity

HB 97 (2015)

  • Annual fee increased to $130

Oklahoma

HB 1449 (2017)

  • $100 annual fee for electric vehicles
  • $30 annual fee for hybrid vehicles
  • “Electric vehicle” means a vehicle that is propelled solely by electrical energy and is not capable of using gasoline, diesel or any other fuel for propulsion.
  • “Hybrid vehicle” means a vehicle that is capable of being propelled at least in part by electrical energy using a battery storage system of at least 4 kilowatt-hours, is capable of being recharged from an external source of electricity and is also capable of using gasoline, diesel fuel or alternative fuel to propel the vehicle.
  • The Oklahoma Supreme Court struck down HB 1449 on Oct. 24, 2017.
    • The court concluded this object of the bill was to generate revenue and thus was a revenue bill and not for another purpose.
    • The bill did not meet the constitutional mandates that govern the passage of a revenue bill due to two constitutional violations in the State of Oklahoma:
      • HB 1449 failed to receive three-fourths of the legislative vote.
      • HB 1449 was passed less than a week before the end of the legislative session. 

Oregon

HB 2017 (2017)

  • $110 annual fee for plug-in hybrid electric vehicles, beginning Jan. 1, 2020
  • “Plug-in hybrid electric vehicle” means a hybrid electric motor vehicle that:
  • Has zero evaporative emissions from its fuel system.
  • Has an onboard electrical energy storage device with useful capacity of 10 or more miles of urban dynamometer driving schedule range, as described by the U.S. Environmental Protection Agency, on electricity alone.
  • Is equipped with an onboard charger.
  • Is rechargeable from an external connection to an off-board electrical source.
  • Meets the super ultra-low emission vehicle standards for exhaust emissions, as defined by the Environmental Quality Commission by rule.
  • Has a warranty of at least 15 years and 150,000 miles on emission control component.
  • Can attain a speed of 55 miles per hour or more.

South Carolina

S.C. Code Ann. §56-3-645/HB 3516 (2017)

  • $120 biennial fee for vehicles operated exclusively by electricity, hydrogen or any fuel other than motor fuel
  • $60 biennial fee for hybrid vehicles
  • “Hybrid vehicle” means a motor vehicle powered by a combination of motor fuel and electricity, hydrogen or any fuel other than motor fuel.
  • "Motor fuel" means gasoline, diesel fuel, substitute fuel, renewable fuel, alternative fuel and blended fuel.

Tennessee

Tenn. Code Ann. §55-4-116/HB 534 (2017)

  • $100 annual fee for electric vehicles
  • “Electric vehicle" means a passenger or commercial motor vehicle with an electric motor as its sole means of propulsion.

Utah

Utah Code §41-1a-1206/SB 136 (2018)

  • $60 annual fee for electric motor vehicles in 2019
    • Fee increases to $90 in 2020
    • Fee increases to $120 in 2021, and thereafter
  • $10 annual fee for hybrid electric motor vehicles in 2019
    • Fee increases to $15 in 2020
    • Fee increases to $20 in 2021, and thereafter
  • $26 annual fee for plug-in hybrid electric motor vehicles in 2019
    • Fee increases to $39 in 2020
    • Fee increases to $52 in 2021, and thereafter
  • $60 annual fee for vehicles fueled by a source other than motor fuel, diesel fuel, natural gas or propane in 2019
    • Fee increases to $90 in 2020
    • Fee increases to $120 in 2021, and thereafter
  • Beginning Jan. 1, 2022, both fees will be indexed to the consumer price index.
  • "Electric motor vehicle" means a motor vehicle that is powered solely by an electric motor drawing current from a rechargeable energy storage system.
  • "Hybrid electric motor vehicle" means a motor vehicle that draws propulsion energy from onboard sources of stored energy that are both:

(a) An internal combustion engine or heat engine using consumable fuel.

(b) A rechargeable energy storage system where energy for the storage system comes solely from sources onboard the vehicle.

  • "Plug-in hybrid electric motor vehicle" means a hybrid electric motor vehicle that has the capability to charge the battery or batteries used for vehicle propulsion from an off-vehicle electric source, such that the off-vehicle source cannot be connected to the vehicle while the vehicle is in motion.

Virginia

Va. Code §58.1-2249(b)/SB 127 (2014)

  • $64 annual license tax for alternative fuel vehicles or electric motor vehicles
    • Hybrid vehicles are excluded.
  • "Alternative fuel vehicle" means a vehicle equipped to be powered by a combustible gas, liquid or other source of energy that can be used to generate power to operate a highway vehicle and that is neither a motor fuel nor electricity used to recharge an electric motor vehicle or a hybrid electric motor vehicle.
  • "Electric motor vehicle" means a motor vehicle that uses electricity as its only source of motive power.
  • If the jurisdiction receiving the revenues from this fee does not use the funds for transportation purposes, the fee within that jurisdiction will fall to $50 in subsequent years.

Washington

Wash. Rev. Code §46.17.323/HB 2660 (2012)

  • $100 annual fee for electric vehicles
  • “Electric vehicle” means a vehicle that uses at least one method of propulsion that is capable of being reenergized by an external source of electricity and is capable of traveling at least 30 miles using only battery power.
  • The fee will expire if the legislature imposes a vehicle miles traveled fee or tax in the state.

HB 5897 (2015)

  • Annual fee increased to $150

West Virginia

W. Va. Code §17A-10-3c/SB 1006 (2017)

  • $100 annual fee for plug-in hybrid vehicles
  • $200 annual fee for electric, hydrogen or natural gas-powered vehicles
  • $100 annual fee for vehicles operating on a combination of electricity and petrochemical fuels

W. Va. Code §11-6D-2

  • “Plug-in hybrid vehicles” means a vehicle that can operate solely on electric power and that can recharge its battery from an on-board generation source and an off-board electricity source.

Wisconsin

Wis. Stat. Ann. §341.25/Act 59 §1895 (2017)

  • $75 annual fee for hybrid electric vehicles
  • $100 annual fee for nonhybrid electric vehicles
  • “Hybrid electric vehicle” means a vehicle that can use gasoline, diesel fuel or alternative fuel to propel the vehicle but that is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and may be capable of being recharged from an external source of electricity.
  • “Nonhybrid electric vehicle” means a vehicle that is propelled solely by electrical energy and that is not capable of using gasoline, diesel fuel or alternative fuel to propel the vehicle.

Wyoming

Wyo. Stat. §31-3-102(a)(xxiii)/HB 9 (2015)

  • $50 one-time, decal fee for plug-in electric vehicles
  • "Plug-in electric vehicle" means any motor vehicle which can be recharged from any external source of electricity, including a wall socket, and the electricity stored in the rechargeable battery drives or contributes to drive the wheels of the vehicle. 

HB 2 (2016)

Clarifies the legislative intent that the fee should be annual, not one-time.

Additional Resources