As electric vehicles become more common, a few states are moving away from a gas tax to favor a mileage tax. But how are mileage fees calculated, and what does this mean for your fleet? Read on to find out.
What Are Mileage Fees?
Traditionally, upkeep on roads has been funded by vehicle registration fees plus a few cents added to the purchase price of each gallon of gasoline or diesel fuel. This was considered an appropriate method of sharing the expense since those who drove most would pay the most for road upkeep, while those who rarely drove would have a minimal cost. With the advent and proliferation of electric and hybrid vehicles, this balance is no longer in place.
Today, some states are instead implementing a vehicle miles traveled (VMT) tax or road usage charge program. Under this model, drivers are charged based on the number of miles they drive rather than the amount of fuel they purchase. The idea is to reinstate the fair sharing of road upkeep costs by ensuring that even those whose vehicles don’t use gasoline or diesel will still pay into the system.
In a road usage charge program, drivers plug an On-Board Diagnostic (OBDII) device into their vehicle to track the miles traveled. You may also be required to submit photographic evidence of your odometer readings periodically, depending on the program. This data is then reported to the state, and you either receive a bill for the mileage fee, or it is deducted from a pre-funded account.
Which States Are Currently Implementing This Program?
Mileage fees are not widespread yet, as there are only a few states that have begun to implement such a program.
The first state to fully implement a road usage charge program was Oregon. In 2012, the state began registering a few select volunteers for the OReGO pilot program. By 2015, they were ready for phase one of the roll-out, registering up to 5,000 personal vehicles. As of 2019, OReGO was open to all personal vehicles in the state, though it’s not currently open for commercial or fleet vehicles.
More recently, Utah has begun testing a Road Usage Charge Program of its own. The program is currently voluntary and open to alternative fuel vehicles including electric, plug-in hybrid, and gas hybrid cars. For those who opt-in, this replaces the flat fee currently charged to alternative fuel vehicles in the state. Those who participate in the program will never be charged more than the cost of the flat fee but may see significant savings.
Hawaii’s program, HiRUC, is currently in the demonstration phase. They’re currently looking for volunteer test drivers to determine the suitability of such a program for the island state.
The Eastern Transportation Coalition
17 states and the District of Columbia have banded together to form the Eastern Transportation Coalition, an organization dedicated to “connecting public agencies across modes of travel to increase safety and efficiency.” While nothing is set in stone yet, the coalition is currently considering a mileage tax. Member states include:
- New Jersey
- New York State
- North Carolina
- Rhode Island
- South Carolina
- Washington DC
Other States Currently Considering a Mileage Tax
Other states currently studying or considering a mileage fee program include California, Colorado, and Washington. Additionally, there is some talk about a possible federal mileage tax program. Currently, though, the federal program has consisted of issuing grants to fund state initiatives.
What Kind of Costs Can You Expect?
Expenses for these programs vary by state, so you’ll need to know which specific programs you’re eligible for to determine your cost.
- Oregon residents can use the state’s Mileage Calculator to compare costs of OReGO versus traditional fuel taxes.
- Utah’s charge is currently 1.5 cents per mile, deducted from the prepaid wallet, up to the amount of the flat fee for alternative fuel vehicles.
- If your state doesn’t currently have a program, but you want to see what one would cost if they did, check out the Washington Post’s VMT tax vs. gas tax calculator.
Azuga currently offers OBDII devices for Hawaii, Oregon, and Eastern Transportation Coalition state volunteers. Learn more about our Azuga Insight devices and all of the features they offer to benefit drivers in any state.