Republicans drop 'car tax,' raise fee on EVs in evolving Trump agenda bill

Republicans on the House Transportation and Infrastructure Committee dropped a proposed $20 annual registration fee for non-electric vehicles from their portion of the evolving legislative package carrying President Trump’s priorities. 

The measure, amended during a committee markup on Wednesday, retains new annual registration fees for electric and hybrid vehicles but would raise the proposed fee for EVs from $200 to $250. The fee for hybrid vehicles will stay at $100, as originally proposed. 

The Transportation and Infrastructure Committee released its piece of the “big, beautiful bill” on Tuesday. The $20 fee for all other vehicles, which was proposed to take effect in fiscal 2031, quickly drew opposition from lawmakers in both parties who dubbed it a “car tax.”

“Of all the crazy things Republicans want to do, now they want a car tax? Hell no,” Senate Minority Leader Charles E. Schumer, New York Democrat, said in a video posted to social media. 

Rep. Mike Lawler, New York Republican, responded to Mr. Schumer’s post with his own, saying, “I’m against the car tax. I’m also against congestion pricing, which you support!”

He said the proposed car tax would charge drivers $20 a year, while New York’s congestion pricing program charges “$9 per day — or upwards of $2,500 a year.”

“Let’s make a deal,” Rep. Nicole Malliotakis, New York Republican, said in response to Mr. Schumer. “I’ll oppose this proposed (and going nowhere) car tax and you oppose the car tax that’s actually in effect & hurting New Yorkers we represent every day — congestion pricing!”

The opposition to the universal vehicle registration fee extended beyond the New Yorkers. 

“Are you out of your fricking mind?” Rep. Chip Roy, Texas Republican, told Politico. “Like, the party of limited government is gonna go out and say we’re gonna have [a car tax]?”

All of the revenue from the proposed registration fees would go to the Highway Trust Fund, which is used to pay for surface transportation programs.

The Highway Trust Fund currently relies on revenues from federal taxes on gasoline and diesel that routinely fall short of expenditures, leading to gaps Congress typically plugs by transferring money from the Treasury’s general fund.

Transportation and Infrastructure Committee Chairman Sam Graves, Missouri Republican, said the $20 annual registration fee for passenger vehicles was floated as a trial balloon for replacing the gas tax with a more sustainable method of financing the Highway Trust Fund. 

“It unfortunately became a political distraction that no longer centered around seriously addressing the problem that the committee knows all too well,” he said. “So while this provision goes away, the problem still remains. We have a broken Highway Trust Fund.”

Mr. Graves said the Congressional Budget Office projects a $142 billion shortfall in the Highway Trust Fund in the five years after the current surface transportation authorization expires on Sept. 30, 2026.

Lawmakers will have to act before then to plug the gap or make cuts to surface transportation programs.

The proposed registration fees for electric and hybrid vehicles, if they survive the legislative process, would still raise some money for the Highway Trust Fund. 

“For far too long, EVs have operated on our nation’s roads without paying into the system, which is primarily funded by federal taxes on gasoline and diesel,” Mr. Graves said. “Plain and simple, this is a fairness issue.”