New Tax on Electric Vehicles in Texas

Electric vehicle charging | Image by buffaloboy, Shutterstock

Texans can now expect to pay a bit more for owning an electric vehicle.

Governor Greg Abbott signed a new law on May 13 that levies an annual tax on electric vehicles in Texas.

This new law requires that owners of electric vehicles pay $400 to register their vehicles and an annual registration renewal cost of $200.

Owners of hybrid vehicles will, however, be exempt from these costs but still will bear the burden of paying a 20-cent per gallon tax on gas. The gas tax helps fund Texas’ road system.

Officials plan to use the funds gained from the new EV tax to bolster the state highway fund, projecting the tax to direct at least $38 million to the fund, according to The Dallas Morning News.

Lawmakers say that the law was made in the interest of preserving fairness in sourcing revenue for the highway fund.

“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 Texas House Representative Terry Canales (D-Edinburg) during April debates on the subject.

The EV market in Texas has been steadily growing, and as more EVs hit the roads, the law will ensure that those drivers contribute to road upkeep.

Texas has the third-highest number of electric vehicles in the nation, with over 58,000 registrations in 2021, according to research from Recurrent. Moreover, Texas boasts the second-largest used electric vehicle market in the nation, having over 3,000 used battery and plug-in hybrid vehicles in inventory as of April 2023.

The Dallas Fort Worth Clean Cities Coalition reports that there are over 195,000 electric vehicles in the state as of May 16.

Governor Abbott recently praised Tesla, a major producer of electric vehicles, for placing the location of its new lithium refining facility, the first in the nation, in south Texas on May 8. Officials said this new facility would create $375 million in capital investment as well as create “good paying” jobs for residents.

The new law will go into effect on September 1.

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