What Is the Texas Electric Vehicle (EV) Tax?

In September 2023, Texas introduced a new fee specifically for all-electric vehicles. This measure was enacted to address a gap in highway funding. Owners of gasoline-powered vehicles contribute to the State Highway Fund through taxes paid on fuel purchases. Since electric vehicles do not consume gasoline, their owners were not contributing to this fund in the same manner. The implementation of the EV fee is intended to ensure that these owners also participate in the financing of roadway construction and maintenance projects across the state.

Fee Structure and Applicability

The fee for electric vehicles is structured in two parts, as established by Senate Bill 505. When an individual purchases a new electric vehicle, they are required to pay a $400 fee at the time of the initial registration. This initial payment covers the first two years of registration, aligning with the state’s two-year inspection cycle for new vehicles. This fee applies to fully electric cars and light trucks with a gross vehicle weight of 10,000 pounds or less.

Following the initial two-year period, EV owners must pay an annual fee of $200 upon each subsequent registration renewal. This recurring charge is collected in addition to all other standard registration fees that apply to vehicles in Texas. The legislation specifically targets vehicles that are fully electric, meaning they operate exclusively on battery power. The fee ensures a consistent contribution to the state’s transportation infrastructure from the growing number of electric vehicles on the road.

The Payment Process

The collection of the electric vehicle fee is integrated into the standard Texas vehicle registration and renewal system. Owners do not need to complete separate forms or make a separate payment for this specific fee. It is automatically assessed and included with other registration costs at the time of renewal or initial registration for new vehicles purchased on or after September 1, 2023.

Vehicle owners can pay the fee using the same methods available for their regular registration renewal. Payments can be made online through the Texas Department of Motor Vehicles (TxDMV) website or the Texas by Texas (TxT) mobile application. Alternatively, owners can mail their payment with the renewal notice to their county tax assessor-collector’s office or complete the transaction in person at a county office or an approved substation.

When reviewing their registration renewal notice, vehicle owners should look for a specific line item designated for the “Electric Vehicle Fee.” This clearly indicates the amount being charged under the new law. If the system cannot determine the vehicle’s fuel type, the owner may be directed to the county tax office to complete the renewal in person.

Exclusions and Special Cases

The Texas electric vehicle fee is specific in its application and does not apply to all vehicles with electric components. Owners of hybrid or plug-in hybrid (PHEV) vehicles are not subject to this fee. Because these vehicles are equipped with internal combustion engines and still consume gasoline, their owners contribute to the State Highway Fund through traditional fuel taxes. The law exclusively targets vehicles that are 100% electric.

Several other vehicle categories are also statutorily exempt from the EV fee. The legislation does not apply to:

• Electric motorcycles
• Mopeds
• Autocycles
• Neighborhood electric vehicles

Certain vehicle ownership situations also provide an exemption from the fee. Governmental vehicles that have exempt registration do not have to pay the EV fee. Furthermore, vehicles for which no registration fee is due, such as those owned by disabled veterans or displaying other meritorious military license plates, are also not assessed the electric vehicle fee. This ensures that individuals who are already granted fee exemptions for vehicle registration are not burdened by this additional charge.