Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Electric Vehicles

EVs Are About to Break the Way America Pays for Roads

The gas tax pays for America’s road repair. So what do we do when everyone drives EVs?

A hundred dollar bill as a gas pump.
Heatmap Illustration/Getty Images

Electric cars may help the United States fix its carbon problem, but they’re about to break the way America pays for its roads.

Every gallon of gas Americans buy is taxed to pay for highway improvements and other infrastructure projects. The federal government takes about 18 cents per gallon of gas (and 24 cents for diesel), while the states, on average, charge even more.

EVs escape this tax. As the Biden Administration pushes for the majority of American cars to go electric within a decade, the nation needs a new way to fund road repairs. That is why all of us, whether we drive gasoline, hybrid, or electric, soon could be taxed on the number of miles we drive.

A vehicle miles traveled (VMT) tax has become a hot idea for replacing the gas tax in the age of electric vehicles. Federal laws — including the Surface Transportation System Funding Alternatives (STSFA) program and the 2021 Infrastructure Investment and Jobs Act (as known as the Bipartisan Infrastructure Bill) — have even included money for states to run VMT pilot programs.

Economists and policymakers love VMT for a variety of reasons. Most importantly, says Adam Hoffer, director of excise tax policy at the nonprofit Tax Foundation, this approach creates a “universal toll road” where people who use the roads the most also pay the most for their upkeep.

“Gas taxes have worked really well as the best proxy for this for almost a hundred years now,” Hoffer told me. “What we're seeing is that with electric vehicles growing in market share, we need a new tool. Vehicle miles traveled taxes seem to fit that bill really well.”

Clifford Winston, a senior fellow in economic studies at the Brookings Institution, says another key advantage is that a VMT is customizable. “It has economically desirable features that go beyond generating the revenue that would be lost as the vehicle fleet turns over from internal combustion engines to EVs,” he says.

The tax could simply charge every vehicle the same number of cents per mile. On the other hand, the government could also adjust the cost up or down to incentivize good behaviors. For example, it could charge people less per mile if they drive EVs (and more if they stick with a gas-guzzler). It could put in congestion surcharges to tempt people to avoid rush hour, or charge trucking companies based on how much weight they’re hauling down the highway.

Winston’s version of VMT is an economist’s dream where price drives every choice. He compares it to the experience of calling an Uber or Lyft, where users are presented with several options at different price points. Now, he says, imagine the same scenario when you slide into your own car and enter a destination. The vehicle’s display could show you several routes with not only different driving times, but also different charges based on distance, congestion fees, or other factors.

There are downsides to this plan, of course, and not just that people may hate its complexity. Lots of folks have no choice but to drive during rush hour, and many can’t afford to replace an older car to take advantage of lower taxes on a new EV.

Privacy is the big one, Hoffer says. If drivers are charged a flat fee per mile, they would need to report their odometer reading to the taxman. A dynamic pricing scheme could be even more intrusive, requiring a way to track us everywhere, all the time.

The simplest way to confront this issue, Winston says, is to set up a third party so the government doesn’t have all this tracking data at its fingerprints. “A private company collects all this [information], sends it to the vehicle owner monthly, and says, here's your bill. Pay it,” he says. According to Hoffer, drivers already hand over this data when they sign up for car insurance programs like Progressive’s “Snapshot” that charge people based on how they drive. However, he says, privacy law around these issues is far from clear.

“There have been court cases before where lawyers have used real-time tracking data from these kinds of apps in lawsuits against people,” he says. “I think there are real questions about whether this data could be accessible via a warrant.”

There are less intrusive ways to replace the gas tax. Some states have begun to charge higher annual registration fees for electric cars to make up for the fact that they don’t burn gasoline. But a flat fee is a blunt instrument that can’t account for how far people drive. It also discourages EV sales.

An obvious replacement for taxing gas by the gallon would be to tax electricity by the kilowatt-hour. But you can’t really replicate the old system. While it may sound simple to tax fast-charging stations, lots of EV drivers do most of their charging at home. The electricity specifically used to charge a car is mixed in with the juice they use to run the dishwasher or the AC, making it hard to differentiate (not to mention that residential electricity is already taxed).

VMT may be the most logical solution to the gas tax problem, Hoffer says, but there are still plenty of bugs to work out. States currently running pilot programs, led by California and Oregon, are experimenting with how to practically implement the fee and how much it should be. It’s possible, Hoffer says, that a VMT will exist alongside the gasoline tax, at least while the U.S. car fleet goes through its transformation from gas to electric.

“I don’t see rapid adoption nationwide of a vehicle mile travel system — but I do think it is on the inevitable side of things,” he says.


Get the best of Heatmap right in your inbox:

* indicates required
  • Green

    You’re out of free articles.

    Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    Electric Vehicles

    Oversize EVs Have Some Big Issues

    Any EV is better for the planet than a gas-guzzler, but size still matters for energy use.

    A very large Ford F-150 Lightning.
    Heatmap Illustration/Ford, Tesla, Getty Images

    A few Super Bowls ago, when General Motors used its ad spots to pitch Americans on the idea of the GMC Hummer EV, it tried to flip the script on the stereotypes that had always dogged the gas-guzzling SUV. Yes, it implied, you can drive a military-derived menace to society and still do your part for the planet, as long as it’s electric.

    You don’t hear much about the Hummer anymore — it didn’t sell especially well, and the Tesla Cybertruck came along to fill the tank niche in the electric car market. But the reasoning behind its launch endures. Any EV, even a monstrous one, is a good EV if it convinces somebody, somewhere, to give up gasoline.

    Keep reading...Show less
    Climate

    AM Briefing: Hottest Summer Ever

    On new heat records, Trump’s sea level statements, and a super typhoon

    We Just Lived Through the Hottest Summer Ever
    Heatmap Illustration/Getty Images

    Current conditions: Torrential rains flooded the streets of Milan, Italy • The U.K. recorded its coldest summer since 2015 • The temperature in Palm Springs, California, hit 121 degrees Fahrenheit yesterday.

    THE TOP FIVE

    1. Summer 2024 was hottest on record

    Summer 2024 was officially the warmest on record in the Northern Hemisphere, according to new data from the EU’s Copernicus Climate Change Service. Between June and August, the average global temperature was 1.24 degrees Fahrenheit higher than the 1991-2020 average, beating out last summer’s record. August 2024 tied August 2023 for joint-hottest month ever recorded globally, with an average surface air temperature of 62.27 degrees Fahrenheit.

    Keep reading...Show less
    Yellow
    Economy

    How to Make a Ghost Town

    The raw material of America’s energy transition is poised for another boom.

    Superior, Arizona.
    Heatmap Illustration/Jeva Lange, Library of Congress

    In the town of Superior, Arizona, there is a hotel. In the hotel, there is a room. And in the room, there is a ghost.

    Henry Muñoz’s father owned the building in the early 1980s, back when it was still a boarding house and the “Magma” in its name, Hotel Magma, referred to the copper mine up the hill. One night, a boarder from Nogales, Mexico, awoke to a phantom trying to pin her to the wall with the mattress; naturally, she demanded a new room. When Muñoz, then in his fearless early 20s, heard this story from his father, he became curious. Following his swing shift at the mine, Muñoz posted himself to the room with a case of beer and passed the hours until dawn drinking and waiting for the spirit to make itself known.

    Keep reading...Show less
    Green