A new report from ARTBA’s Transportation Investment Advocacy Center™ examines how states tax alternative-fuel and electric vehicles.

As the use of alternative-fuel and electric cars and trucks continues to grow as a share of the U.S. fleet, state governments are relying on a mixture of user fees and taxes to ensure these drivers are contrib­uting their fair share to highway and bridge construction and maintenance programs.

The number of alternative-fuel cars and light trucks is expected to grow from 21.5 million vehicles in 2016—accounting for 9 percent of the U.S. vehicle stock—to 29.3 million vehicles in 2021, or about 12 percent of the entire fleet, according to data from the U.S. Energy Information Administration.[1] Alternative-fuel vehicles include electric cars and trucks, hybrids, and vehicles that run on propane, fuel cells and natural gas.

One key challenge for state governments is that these vehicles still cause wear and tear on roads and bridges, but are not paying as much in motor fuel related taxes because they use significantly less gas and diesel fuel. Alternative-fuel cars average anywhere from 50 miles per gallon for an electric-gaso­line hybrid to as much as 132 miles per gallon for an electric vehicle. This is compared to an average of 26 miles per gallon for the entire stock of U.S. cars.

This report provides information on some of the strategies states are using to address the issue of alternative-fuel vehicles. Its main findings:

  • 45 states levy a cents per gallon excise tax on the purchase of alternative fuels;
  • 10 states require electric vehicle owners to pay a fee;
  • 13 states provide the option for alternative fuel vehicle owners to pay a fee rather than an excise tax;
  • 6 states require alternative fuel dealers to obtain a special fuel license or pay a fee; and
  • 2 states apply only the state general sales and use tax to alternative fuels.

Read the full report.

For questions or comments on the report, contact Carolyn Kramer.