Texas Imposes Additional Fees on Electric Vehicles to Offset Lost Gas Taxes

Starting in September, electric vehicle (EV) owners in Texas, the second-largest US state, will face an extra $200 annual registration fee for their vehicles, with an upfront cost of $400 if they purchase another EV, as per new state law. The law has been enacted to compensate for lost gas tax revenue due to the growing adoption of electric vehicles.

This fee will not be applicable to hybrid vehicles. The collected revenue will be directed to the state highway fund, supporting road construction and maintenance projects. Texas is among approximately 30 states imposing registration fees on EVs.

The newly introduced fees in Texas are notably higher than those in other states and nearly double the average gas taxes paid at the pump. This move aligns with the efforts of some Republican-led states to counter the Biden administration’s initiatives for electrification and carbon reduction in transportation.

The Biden administration has introduced substantial subsidies for certain EVs through the Inflation Reduction Act, along with stringent tailpipe pollution standards from the Environmental Protection Agency.