House version of Trump’s 'One Big, Beautiful Bill' creates federal tax on electric, hybrid vehicles

There's a first-of-its-kind national vehicle registration tax tucked inside the final version of President Trump and the GOP's "One Big Beautiful Bill Act." The legislation has created a new federal vehicle tax for energy-efficient vehicles that rises each year based on inflation.

The annual national registration fee would begin at $250 for electric vehicles and $150 for hybrid vehicles. An earlier version of the bill included a $20 fee for all other vehicles, but it was dropped from the final version that passed the House on Thursday. The only Republicans to vote against the bill were Reps. Thomas Massie of Kentucky and Warren Davidson of Ohio. All House Democrats voted against it.

The Senate is now considering the legislation.

Under the House-passed bill, the administrator of the Federal Highway Administration would impose the fees each year. 

According to the text of the bill, a state motor vehicle department must "incorporate the collection of the fees" into the vehicle registration and renewal processes administered by each department "so long as such fees are imposed for each year in which the fees are required." 

States get a cut of the action

A state DMV must also "obtain approval from the Administrator to establish an alternate means of compliance for the collection of such fees that is acceptable to the Administrator."

The bill allows states to retain 1% of the total fees collected. The amount of the fees will rise each year in accordance with inflation. 

"The amounts specified in subsection (a) shall be increased on an annual basis to account for the rate of inflation each fiscal year in accordance with the Consumer Price Index for All Urban Consumers of the Bureau of Labor Statistics," the bill states.

Alex Muresianu, a tax policy expert from the Tax Foundation, told Just the News that fees would help the Highway Trust Fund (HTF), which could become insolvent as early as 2028. The Peterson Foundation explains the Highway Trust fund was "established in 1956 to provide a more dependable source of funding from the federal government for the construction of the interstate highway system."

"They do target real problems. The Highway Trust Fund is severely underfunded, partly (though not primarily) due to EVs not paying the gas tax," Muresianu said. "The fees would raise revenue and improve HTF's fiscal position, although not nearly enough to fix the HTF's structural deficits." 

Muresianu said the fees in the bill are "poorly targeted" because they are flat fees and they "do not adjust for the number of miles" a vehicle owner drives each year.

"That means effectively overcharging EV/hybrid owners that don't drive very much. Additionally, EVs are not the only vehicles that are undertaxed under current law," he said. "Conventional passenger cars and (particularly) heavy commercial traffic are also not covering the maintenance costs they impose. Leaning on EVs alone to fix the problem is not a sound approach."

EV owners will be asked to pay their fair share

In addition to imposing new registration fees, the GOP eliminated the $7,500 tax credit on the purchase of electric vehicles and plug-in hybrids made in the U.S. that meet certain requirements for "critical minerals and battery components."

Rep. Riley Moore, R-W.V., said the new fees are a "fair way" to get green vehicles to pay into the Highway Trust Fund. At present, EV owners -- who pay little or no gas tax -- avoid paying into the pool that builds public highways and transportation programs.

"Well, it's certainly not meant to create a backlash. What it's supposed to do is treat everybody fairly. These electric vehicles and hybrid vehicles either use a little bit of gas, or the electric vehicles use no gas at all so they're not paying into the Highway Trust Fund at all," Moore said on the Just the News Not Noise TV program. "And these vehicles, particularly electric vehicles, tend to be much heavier than your standard vehicle, which they put more wear and tear on the highway itself. So there has to be some way for them to pay in, as we all do that drive gas-powered vehicles."

Rep. Seth Magaziner, D-R.I., said he understands the reason for the new fees, but the GOP should have left the $7,500 tax credit for clean vehicles in the bill.

"I understand conceptually that if we're going to be moving toward more EVs on the road it's not sustainable to just have the gas tax pay for keeping our infrastructure up to date so that part doesn't necessarily concern me," Magaziner said during a press gaggle on Capitol Hill. 

"What concerns me more is the elimination of the tax credits to make it easier for people to buy EVs if they choose to do so. It should be a choice, but if we don't continue to invest in having a strong EV industry in the United States, China and other countries are going to eat our lunch," he added.