TL/DR –
The proposed “One Big Beautiful Bill Act” from Republican representatives in the U.S. House of Representatives could impose an annual federal fee on electric vehicle (EV) owners, aiming to raise more than $800 million a year for the Highway Trust Fund. This is in response to the decline in gas tax revenues as more drivers switch to EVs. The bill also proposes the elimination of federal tax credits for new EVs after 2026 and introduces a temporary deduction for car loan interest for loans on eligible vehicles in 2025-2028.
Electric Vehicle Owners Brace for Proposed Federal Fee
The United States has more than 3.5 million registered electric vehicle (EV) owners, a figure growing rapidly. However, a proposed legislation, the One Big Beautiful Bill Act, could soon introduce a new annual federal fee impacting EV owners. The Act is being proposed by Republicans in the U.S. House of Representatives to raise over $800 million a year for the
Highway Trust Fund.
This move is due to declining gas tax revenues as the adoption of EVs increases. House Transportation Committee Chairman, Sam Graves, states that it is a fairness issue and it’s time EV users contribute their share for road use.
The concept isn’t new as several states already charge annual fees for EV owners, ranging from $100 to $250. However, the proposed federal fee would match the highest state fee and apply to all EV owners, including hybrid vehicle owners who face a potential new $100 annual fee.
Implications of the New $250 EV Fee
The tax and spending bill, that includes this new fee is currently under consideration in U.S. Senate. This fee would be collected by the
Federal Highway Administration to support the Highway Trust Fund. However, it’s worth noting that the proposed $250 fee is over three times what a typical gas-powered car owner pays in federal gas taxes annually.
The federal gas tax, unchanged since 1993, is 18.4 cents per gallon, resulting in most drivers paying less than $250 a year towards highway maintenance.
If approved, the $250 annual EV fee would go into effect as soon as the bill is signed. The exact timing for when owners would start paying the fee would depend on the Federal Highway Administration’s rule finalization and payment system setup.
Impending Changes in the Car Market
The House version of the bill also proposes phasing out federal tax credit for new EVs after 2026 and introducing a temporary deduction for car loan interest.
As reported by Kiplinger, this bill introduces a temporary
deduction for car loan interest, for loans taken out on eligible vehicles in 2025 through 2028. This deduction is limited and may not apply to used cars.
Elon Musk’s Critique and Its Impact on Tesla
Tesla CEO Elon Musk has been critical of the House GOP tax mega reconciliation bill, terming it a “disgusting abomination.”
Notably, Tesla is facing business challenges including a stock drop and declining global sales. Despite his recent rhetoric, Musk has previously supported the Trump administration’s approach to EV policy.
Future Costs for EV Owners
If the bill becomes law, EV owners will face higher annual costs and lose access to federal purchase incentives. At the same time, some buyers may benefit from the new car loan interest deduction. Therefore, EV owners should prepare for possible new annual fees and the potential end of tax credits.
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