Over 84,000 drivers in Oregon could be hit with a new ‘Pay-Per-Mile’ fee after Oregon becomes the second state, after Hawaii, to introduce mandatory pay-per-mile fees for electronic vehicles. As of May 2025, there were over 84,000 EVs registered in the state, which is about 2% of total vehicles.
Why the Pay-Per-Mile Fee?
This pay-per-mile policy comes at a time when Oregon’s transportation department is grappling with a $300 million transportation budget deficit. The deficit results from declining gas tax revenue, inflation, and spending constraints. Due to this deficit, the transportation department may find it difficult to fund critical services such as road repairs and snowplowing.
To offset this deficit, Democratic Governor Tina Kotek has proposed a road usage charge for all EV drivers that is equivalent to 5% of the state’s gas tax. This is alongside a 6-cent increase in the gas tax to 46 cents per gallon.
The pay-per-mile fee for EV owners will ensure that EV owners contribute fairly to road maintenance, just like those who own gas-powered vehicles. For over a decade, Oregon has had a voluntary road usage charge program. The new proposal would make it mandatory for certain EVs starting in 2027, and it will expand to hybrids in 2028.
Who Will Pay and How Much?
The fee will apply to those who own electric vehicles and hybrid vehicles starting in 2028. EV drivers will have two options: pay approximately 2.3 cents per mile driven or opt for an annual flat fee of $340.
Drivers who enroll in the program will not have to pay the supplemental EV registration fee. This will ensure that they contribute to road maintenance without additional fees.
In comparison, EV drivers in Hawaii pay $8 per 1,000 miles, which is capped at $50 per year or a flat $50 fee. All Hawaiian EV drivers must enroll by 2028. The proposed fee for EVs will start in 2027, while for hybrids it will start in 2028.
How the Transportation Department Will Track Mileage
According to Oregon’s transportation department, private contractors will manage mileage reporting. Contractors will use the following methods:
- Smartphone apps to enable drivers to report mileage easily.
- Vehicle Telematics. This is built-in technology that enables automatic tracking.
Privacy Concerns
Although Oregon’s approach enhances flexibility, unlike Hawaii’s odometer-based system, it has sparked concerns regarding data privacy. To address these concerns, Oregon’s voluntary program will delete data every 30 days after payment.
The vehicle telematics will also enable Oregon to move away from plug-in GPS devices, which are expensive and can be removed by rogue owners. Despite the plan to delete data monthly, critics worry that mileage data might be misused.
A Sustainable Funding Solution
Experts have confidence that the system will be a long-term solution for transportation funding as gas tax revenue declines. Other states are also looking to adopt a similar model, including states like Virginia and Utah. However, there is a major challenge in transitioning to the system, since drivers are accustomed to traditional taxes.
Impacts on EV Adoption
Critics, such as Brett Morgan from Climate Solutions, have warned that the additional fees could discourage people from purchasing electric vehicles (EVs). While Morgan proposes a “fair share” approach, he argues that EV owners should not be penalized to the extent that gas-powered cars look more attractive.
Political Opposition
Republican lawmakers in Oregon have opposed the ‘Pay-Per-Mile’ fee. They instead propose that the state redirect existing funds from public transit and climate initiatives to use in road maintenance.
In Arizona, voters will decide in 2026 whether to pass or ban mileage-based taxes. This indicates that such programs are facing resistance in some states.
Conclusion
Oregon’s pay-per-mile system addresses the deficit in transportation funding caused by declining gas tax revenue. It comes at a time when electric vehicles are growing. While the model is promising, it is a major change for drivers who are already accustomed to traditional taxes. Additionally, the new ‘pay-per-mile’ fee comes with data privacy concerns, which might be some of the reasons people might be against it.