Electric Vehicles: EV Taxes by State, 2025

For several years, residents of all states have been eligible to receive a federal tax credit of $7,500 for qualified EV purchases. However, this tax credit ends for vehicles purchased after September 30, 2025. Seventeen states offer an additional incentive beyond the federal credit, ranging from a $1,500 incentive in Rhode Island to a $7,500 credit in Oregon and Maine.

Contrary to a tax incentive, 40 states impose a higher annual vehicle registration fee for EVs and some hybrid vehicles to help offset forgone gas tax revenue. These fees range from $50 in Hawaii and South Dakota to $260 in New Jersey. These, however, have generally been justified as modest efforts to defray the lack of gas tax collections from EVs, which may be more environmentally friendly, but still put wear and tear on roads.

Major Changes Since July 2023

California and Alaska ended their electric vehicle tax credit programs.
New Mexico introduced a new electric vehicle tax credit.
Maryland, Montana, New Hampshire, New Jersey, Pennsylvania, Rhode Island, Texas, and Vermont introduced new registration fees for electric vehicles.
Tennessee increased the registration fee for electric vehicles from $100 to $200.
Kansas increased the registration fee for electric vehicles from $70 to $165.
Indiana increased the registration fee for electric vehicles from $150 to $230.
Nebraska increased the registration fee for electric vehicles from $75 to $150.
Wisconsin increased the registration fee for electric vehicles from $100 to $175.
North Carolina increased the registration fee for electric vehicles from $140.25 to $214.50.

Eleven states both offer an incentive for the purchase of an EV and impose a higher registration fee for EVs than for combustion engine vehicles. The table below summarizes these policies.

Another response by states to backfill reductions in gas tax collections has been to implement a tax on EV charging stations. States like Georgia, Iowa, Kentucky, and Oklahoma impose a tax per kilowatt-hour distributed by charging stations. While this added user fee may help equalize treatment between combustion engines and EVs, because many users charge their EVs at home, these taxes can fail to fully account for EV road use.

Higher registration fees and EV charging station taxes are an attempt to better connect vehicle miles traveled (VMT) to transportation and road funding, yet in some instances, they are implemented in conflict with policies aimed at increasing EV adoption. A simpler transportation policy solution would be 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 state.

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.

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 $0.0111 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 $0.0114 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 state EV taxation landscape reflects the evolving transportation sector and the pressing need to address both fiscal gaps in road funding and environmental concerns. As the EV market continues to evolve and technology advances, it’s likely that tax policies will also adapt.