The House of Representatives Sends Bill to Senate With EV-Targeting Fees, Tax Credit Elimination

Motor Trend

24-05-2025

U.S. politics are intersecting with EVs in a big way. First, Congress sent a bill to kill 'EV mandates' by removing California's ability to set its own fuel economy standards for cars sold there. Now, the U.S. House of Representatives has passed the 'One Big, Beautiful Bill' President Trump requested over to the Senate, which Republicans hope will be signed into law soon. This bill aims to strike down federal EV tax credits that help incentivize EV adoption by offsetting some of their price premiums over internal-combustion equivalents, and introduces a Federal annual registration fee for EVs and hybrid vehicles.
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Removal of the federal tax incentive for purchasing or leasing an EV or a plug-in hybrid vehicle was a key campaign promise of Trump's. Now, as President, it appears he might well be on the way to fulfilling that promise and potentially more if the Senate passes the 'One Big, Beautiful Bill' that the House of Representatives sent over for reconciliation.
Of the over 1,000 pages within the bill that USA Today posted, there is a provision to accelerate the expiration of the Federal EV Tax Credit from December 21, 2032 to December 31, 2025, killing the credit for eligible buyers looking to take advantage of it in 2026.
That's not the bill's only provision affecting EV ownership. In addition to removing the tax credit, the bill looks to institute a Federal Annual Registration Fee for both EVs and hybrid vehicles. The reasoning behind this is the fact that EV owners—and, to a lesser extent, hybrid vehicle owners—don't pay as much tax towards the government related to roadways that gas taxes help pay into. What would this annual tax cost? $250 for every EV and $100 for every hybrid vehicle.
There is some logic in getting EVs—in particular—to pay for road use, somehow. They use roads, too, while not paying into the gas tax (or paying less into them, in the case of hybrids) than other vehicles. That's a fair debate to have.
But the bill swings the pendulum wildly against EVs and hybrids. At $250 per year, the proposed registration fee would equate to the taxes paid by an internal combustion vehicle consuming 1,358.7 gallons of fuel (with the federal tax on fuel being $0.184 per gallon). Putting this another way, that's 32.35 barrels of fuel according to FuelEcononmy.gov calculation with a barrel equaling 42 gallons of fuel. The only vehicle close to that annual fuel consumption (as estimated by the EPA) is the Bugatti Chiron Super Sport, at 33.10 barrels. A supercar that gets 8 mpg city, 11 highway, and 9 combined and needs 11.1 gallons of fuel to go 100 miles. It's also a car that costs $3.825 million. That's an extreme example, of course, but the point is, the proposed EV fee seems to penalize EV drivers by saddling them with a higher burden of gas tax–like revenue for road maintenance and repairs.
In a way, hybrids are lucky; per the new bill, they face a mere $100 annual fee, but that's still equivalent to paying gas tax on a ridiculous 543.5 gallons of gasoline. To put that one into perspective, you would need to essentially double the annual fuel consumption—6.8 barrels of fuel—of the 2025 Toyota Camry Hybrid AWD XSE to equal the $100 annual fee. And that's not even the most fuel-efficient hybrid there is in Toyota's lineup, that goes to the 2025 Toyota Prius at 5.2 barrels, and you would need to increase its consumption by 2.5 times.
There is a legitimate need to have EVs pay for their road usage, however, the way this bill is going about it is wrong as far as the amount an EV or a hybrid vehicle should pay. Essentially charging an EV what the owner of a powerful supercar might pay for seems punitive, not playing field leveling. Never mind that there does not exist national vehicle registration fee for any vehicle, regardless of what it's powered by, though there is a gas guzzler tax on vehicles with excessively poor fuel economy. But that tax is based on the idea of excessive consumption—EVs do little of the sort, even if they should pay into the same gas tax slush fund that maintains our roads. A bill that balances the need for EVs to pay their fair share seems like a fine idea—but the math on this proposed fee seems off.