New Federal EV Fee Proposal Could Add Annual Charges for Electric and Plug-In Cars

As the conflict and uncertainty in the Middle East continue, so do stubbornly high gas prices. It’s a reality that has the potential to push more new and used car shoppers to reconsider electric cars (EVs) and plug-in hybrids (PHEVs). But some of the savings from going all-electric or mostly electric could shrink if the proposed Build America 250 Act is passed and signed into law.

The proposed bill would slap an annual federal government fee on EVs and PHEVs amounting to $135 for fully electric vehicles and $35 for plug-in hybrids. The bad news doesn’t stop there. The fee would rise by $5 each year until it reaches a maximum of $150 for EVs and $50 for PHEVs. That’s on top of the fees many states already collect from EV owners to help fund road improvements. The new federal fees would be sent to the U.S. Department of Transportation’s Highway Trust Fund, which distributes money to states for road and transit projects.

The fees are being promoted as a “paying your fair share” type of tax on EVs and PHEVs, which either don’t use gas in the case of EVs or far less gas with plug-ins, and thereby aren’t paying the federal gas tax, revenues of which have begun to decline as sales of EVs and PHEVs cut into the market.

The bill is meant to replace the current highway funding measure, which expires in September. It was proposed by Missouri Republican Representative Sam Graves, who also chairs the House Transportation and Infrastructure Committee. Washington state Democratic Representative Rick Larsen has also voiced support for the measure, making the Build America 250 Act a rare bipartisan effort, although the proposed act contains far more than just the tax on EVs and PHEVs.

According to Graves’ announcement, the fees collected would increase federal revenue by more than $38 billion over 10 years for the Highway Trust Fund. By comparison, the current federal fuel tax of about 18 cents per gallon on gasoline and 24 cents per gallon on diesel brings in roughly $40 billion per year. With gas prices continuing to remain high amid the conflict in the Middle East, Congress is also considering a fuel tax holiday to provide some relief. But that relief would still fall short of offsetting how much gas prices have risen since 2025.

The Build America 250 Act is now in its next phase and is under discussion by the House Budget Committee. If approved, it will move to a vote in Congress. The bill itself also includes $21 billion for the Coast Guard and $12.5 billion for the Federal Aviation Administration to modernize air traffic control technology.

In addition, it would remove funding for several Inflation Reduction Act programs, including Neighborhood Access and Equity Grants, Environmental Review Implementation Funds, Low-Carbon Transportation Materials Grants, and the FAA’s Alternative Fuel and Low-Emission Aviation Technology Program. Those proposed cuts would reportedly reduce federal spending by some $4 billion.