CBO Estimates Proposed EV Fee Will Raise $12 Billion

The Congressional Budget Office (CBO) released an estimate of the potential revenue from a registration fee on Electric Vehicles (EVs) included in the bipartisan Build America 250 Act, which would reauthorize surface transportation programs for five years. CBO finds that the EV registration fee would generate roughly $12 billion over a ten-year period, far less than the amount needed to offset the bill’s additional cost, let alone the significant shortfall that the Highway Trust Fund (HTF) faces.

CBO estimates that the fee itself would bring in about $17 billion over a decade, but that it would also reduce collection of income and payroll taxes, resulting in a net revenue increase of $12 billion.

The added revenue is important, particularly as the HTF faces a $131 billion shortfall through Fiscal Year 2031 under current law or $148 billion under the BUILD America 250 Act and will be exhausted in 2028. However, that revenue should be used to help close the shortfall – not somewhat offset an even larger funding gap.

Policymakers should consider the EV registration fee along with other potential measures to put the HTF’s spending and revenues into balance. Given that this version of the fee would only raise $12 billion, it is necessary to find more revenue or spending cuts to align transportation costs with funding.