Tennessee Governor Bill Lee has proposed an increase in electric vehicle registration fees, which he argues will help make up for lost gas tax revenue as more drivers switch to EVs.
The state currently charges EV owners $100 annually on top of typical vehicle registration costs, which Lee proposes raising to $300.
With an increasing number of people swapping gas-powered cars for EVs, and therefore buying less gas, Tennessee transportation officials say road maintenance projects funded by gas taxes could be in jeopardy. Worsening congestion requires $26 billion in remediation projects, and only $3.6 billion is accounted for in the budget, the AP reports. Officials are also concerned with the projects taking too long—15 years on average— and coming in 40% over budget.
Lee, a Republican, is against raising gas taxes to bridge the gap like his GOP predecessor, Gov. Bill Haslam, did in 2017. Instead, Lee is considering increasing EV registration fees as well as allowing private companies to bid on new express highway lanes and impose tolls.
If the proposed EV registration increase passes, Tennessee's $300 fee would be the nation's highest. However, the final number is yet to be confirmed. In 2019, rumors of a $1,000 EV tax in Illinois circulated before the final bill landed at $100, Electrek reports.
“We want to make sure there’s a fair fee for everyone,” Gov Lee told reporters, according to the AP. “We’ll figure out what that number is and move forward.”
Does Your State Have an Annual EV Fee?
At least 31 other states also demand extra cash from emissions-free drivers. They typically range from $50 (Hawaii, South Dakota) to around $200 (Alabama, Arkansas, Ohio). Georgia has the highest at $213.70 plus $50 for special EV license plates and tags.
Most states also charge plug-in hybrid vehicles (PHEVs), as they use less gas and therefore accrue fewer taxes, as well as standard hybrids (HEVs). The map below contains the registration fees for EVs, PHEVs, and HEVs in each state. (See our explainer for the differences between them.)
Beyond Tennessee, Utah is upping EV registration fees from $120 in 2022 to $130.25 in 2023, with similar increases for PHEVs and HEVs. California and Kansas both began charging fees in 2020, though California does not require vehicles made before the 2020 model year to comply.
Many states also have rebates to offset the upfront cost of an EV or installing a home charger. These typically range from a couple hundred to a couple thousand dollars, and some (like New York's) can be used on top of the $7,500 federal tax credit.