Electric Vehicle Tax Treatment by State, 2026

Major Changes as of July 2026:

• Oklahoma and Vermont ended their electric vehicle tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income rather than the taxpayer’s tax bill directly. programs.
• Rhode Island increased their standard EV rebate from $1,500 to $3,000.
• Delaware introduced a new registration fee at $110 for EVs and $85 for hybrids.
• Colorado, Michigan, Minnesota, Missouri, New Jersey, Pennsylvania, and Utah raised their registration fees substantially.
• California, Georgia, Indiana, Kansas, and Kentucky raised their registration fees to adjust for inflation.
• Wyoming reduced their EV fee as part of a broader reform to equalize the tax treatment of electric and combustion vehicles.
• Many state incentive programs have exhausted the funds they were allocated and have closed to new applicants, though may be reopened with new funding.

Of the 41 states that levy a fee, 40 of them earmark the revenues mostly for transportation. Six states divert some of the revenues to unrelated transportation programs like mass transit, two states divert small portions of the revenue to unrelated spending like tourist promotion, and three states dedicate some portion of the fees to the general fund. In Rhode Island, fee revenues are entirely sent to the state’s general fund.

Thirteen states both offer an incentive for the purchase of an EV and impose an additional fee for them compared to combustion engine vehicles. This disjointed circumstance arises as states try to further two goals with one taxed product.

States have also tried to innovate with other policies aimed at backfilling reductions in gas tax revenue. Iowa, Kentucky, Oklahoma, Wisconsin, and Wyoming have imposed a tax per kilowatt-hour distributed by charging stations. Other states like Georgia and Minnesota have legislated one to go into effect next year. This is aimed to further equalize the treatment of internal combustion engine vehicles and electric vehicles, but can create behavioral distortions. Firstly, it effectively disincentivizes charging stations. Additionally, it encourages charging electric vehicles at home to avoid the tax, thus undermining its effectiveness at coupling taxes paid to road use.

It can also lead to EV drivers being effectively double taxed. If annual fees are calibrated to recoup lost gas taxes and an excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. per gasoline gallon equivalent is levied on charging, EVs would have twice the effective tax burden as a gas-powered car. Such a discrepancy, along with sales of electricity for EV charging being subject to sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.  while gasoline sales were not, was addressed by the Wyoming legislature earlier this year.

Both additional fees and charging station taxes are attempts to approximate a user fee for EVs, but both fall short. A simpler solution would be to implement a VMT tax.

A VMT tax is levied on the number of miles traveled by an individual vehicle. This is usually done by odometer reading or through a GPS device. While there are privacy concerns with the use of GPS devices to track VMT, relying purely on odometer readings can result in drivers being charged for miles driven outside of the taxing jurisdiction. A pilot program in Washington found that a standard exemption for non-taxable miles solves that problem for most drivers.

Moreover, as devices and apps used by insurance providers to track safe driving become commonplace, similar tools could be used to directly link the miles traveled to public road and infrastructure spending in the proper jurisdiction.

A VMT tax essentially prices a mile of driving on government roads, a much better proxy user fee for road use than either the gas tax or EV fees. States need not add a fee for EVs, tax charging per kilowatt-hour, tax by the gasoline gallon equivalent of propane or natural gas, or levy a per-gram of thorium tax for nuclear powered cars of the theoretical future. Instead, they can simply tax per mile driven—regardless of how, where, when, or why.

Currently, four states have active VMT tax programs:

• Oregon drivers with vehicles rated above 20 MPG are allowed to opt to pay $0.02 per mile driven instead of the state’s $115 electric vehicle registration fee. Miles traveled are tracked by either an odometer plugin or a telematic device. This was enacted in 2013.
• Utah electric vehicle drivers may opt to pay $0.0125 per mile driven, up to the value of the state’s electric vehicle registration fee. This is tracked via an app. The program was enacted in 2020.
• Virginia allows drivers with vehicles rated above 25 MPG to opt into a per mile payment based on the vehicle’s fuel efficiency. For electric vehicle drivers, this value is set to $0.0117 per mile. Mileage is tracked via an OBD plugin. This was enacted in 2022.
• Hawaii began the HiRUC program on July 1, 2025, allowing electric vehicle drivers to pay either $0.008 per mile or a $50 flat fee. The mileage is measured by odometer reading. Because of the state’s unique geographic situation, odometer-only reporting will likely avoid the issue of taxing out-of-state travel. This was enacted in 2025.

Vermont was expected to begin a similar program in 2025, but implementation has been postponed to 2027. Additionally, California and Washington have run significant VMT pilot programs.

The current trends in EV taxation reflect the once novel technology becoming increasingly mainstream. Now that states are increasingly thinking about EV policy in terms of making up revenue rather than incentivizing their adoption at cost, the EV market will adjust. In turn, as EV technology and adoption continues, it’s likely that tax policies will also adapt.