Texas Governor Greg Abbott signed a new tax into law that will see electric vehicle owners pay $400 to register a new EV and $200 a year to renew registration.
Texas Senate Bill 505 was passed by the state’s Senate at the end of March, followed by the House in late April, and Greg Abbott made it official on May 13 when he signed the legislative proposal into law.
Going into effect September 1, the new electric vehicle tax is dedicated to the state highway fund, as is the 20-cent per gallon gas tax paid by owners of hybrids and gas-fueled vehicles. Mind you, some gas tax revenue is diverted to schools as well.
Texas, which is home to Tesla’s factory in Austin that builds the Model Y, has nearly 200,000 electric vehicles registered in the state, and the number is growing faster every year. More than 30,000 new EVs were added to the roads so far this year, according to data from the Dallas-Fort Worth Clean Cities Coalition cited by The Dallas Morning News.
Taxing EVs is estimated to bring in at least $38 million in new money to the state highway fund, but that’s pocket change compared to the $3.8 billion in revenue that gasoline and diesel taxes are estimated to generate in 2024. The new tax does not apply to electric motorcycles, mopeds, and autocycles.
“This is extremely important to make sure people are paying their fair share and that we have adequate funding for the preservation and maintenance of our highways in the future,” said state House Representative Terry Canales, an Edinburgh Democrat, during debate on the law in April.
It remains to be seen if EV owners will find the new tax fair seeing as the average owner of a gasoline-fueled vehicle pays roughly $130 in state gas taxes per year, according to average annual mileage and fuel economy data from the Federal Highway Administration and the Environmental Protection Agency.
Interestingly, legislators proposed creating a lower tier of electric vehicle fees set at $100 a year for lighter-weight vehicles during debate over the bill in the House on April 24, but the proposal was rejected, and the bill was passed with wide bipartisan support.