PennDOT relies on gas tax to fund 78% of its’ revenue needs, far more than neighboring states
After the news of the upcoming license plate option for Pennsylvania drivers, there have been other changes that aim to require electric vehicle owners to pay a road user fee in lieu of the gasoline tax that other motorists pay.
With major gas-powered automakers transition to manufacture electric vehicles by 2035, PennDOT officials say the gas tax is no longer able to generate the money that is needed to keep the state’s transportation network in good repair.
That’s right, state legislation just passed a bill requiring battery-powered EV owners to pay a $200 fee when registering or renewing their registration next year, increase to $250 in 2026, $286 in 2030, and be tied to inflation in future years.
Plug-in hybrids will pay 25% of the EV fee, or $50 in 2025. The fee will be due annually at the same time as vehicles’ registration.
Commercial electric vehicles are unaffected by the bill and will continue to pay the alternative fuel tax on electric use for their vehicles.
Pennsylvania has had dramatic growth in electric vehicle ownership, with a 45% rise compared to a year ago as state and federal funds drive the buildout of public charging stations on its main highways.
House Transportation Committee Ed Nielson (D-Philadelphia) said the legislature has been working to establish a way for electric vehicle users to pay their fair share of highway costs for years.
“Both sides of the aisle are in support of doing this,” Nielson said. “A lot of people are calling it tax — a tax it is not. It is a fee to use our roadways, a fair and equitable fee.”
Why is the gas tax important?
As more people purchase hybrid, electric, and fuel-efficient vehicles, gas tax revenues decline, states are eager to find a more sustainable source of revenue, and national politicians are watching closely.
Related: Pennsylvania vehicle mileage tax being discussed to replace lost gas tax revenue
Pennsylvania relies on its liquid fuels tax to pay for highway and bridge maintenance, state police, and other transportation-related costs.
Shapiro’s 2024-25 budget proposal includes more than $1.7 billion in tax revenue from gas and diesel fuel purchases.
While Pennsylvania has an alternative fuels tax, it relies on users to self-report and remit any taxes that are due, which only collected $778,000 in 2023. The new bill eliminates the alternative fuels tax on electricity for at-home charging.
An analysis by the House Appropriations Committee projects that the fees on EVs and plug-in hybrids would generate more than $16 million in 2025 and as much as $28.8 million by 2030.
The Commonwealth is not the only one looking to add registration fees for EVs. Texas charges a $400 fee in the first year that a new EV is registered and $250.75 a year thereafter.
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