The gas tax is officially being replaced by a new ‘Pay-Per-Mile’ system, which policymakers believe is the solution to shortages in transportation budgets. This new approach ties road funding directly to the amount of driving rather than fuel consumption. The policy is already in effect in some states, with others preparing to follow.
Why Gas Taxes Are Insufficient
Gas Taxes are insufficient because of the following reasons:
1. Many states haven’t increased the federal gas tax since 1993, when it was set at 18.4 cents per gallon.
2. Modern automobiles use less fuel than their predecessors, and electric vehicles (EVs) are fully exempt from gas taxes.
Because of these two reasons, less tax has been collected on the roads, and this has led to insufficient funds for improving transportation.
Officials in Oregon have warned of a $300 million deficit that could jeopardize essential services like snow removal and road repair. Policymakers are actively looking for ways to ensure that all drivers, regardless of the type of vehicle, contribute equally to the cost of maintaining the country’s roads to address these problems.
How Pay-Per-Mile Works
The state imposes fees on drivers according to the number of miles they travel rather than taxing fuel. Mileage can be tracked via secure reporting systems, onboard devices, or odometer readings.
Oregon has proposed that beginning in 2027, EV drivers will pay about 2.3 cents per mile or opt for a flat annual fee of $340. To balance the system, Oregon will also raise its gas tax by six cents per gallon. The program will expand to hybrids in 2028.
Hawaii launched its program in 2023, requiring EV drivers to either pay a $50 flat fee annually or $8 per 1,000 miles. By 2028, all EVs will be enrolled, and by 2033 the system is expected to cover all light-duty vehicles.
In addition to these states, others are beginning to test mileage-based systems as well. While California and Washington are conducting pilot initiatives to determine viability, Utah and Vermont have voluntary programs.
Benefits of Pay-Per-Mile
- Every vehicle on the road will be required to pay its fair share depending on the miles it covered.
- Mileage fees will ensure stable funding because they do not fluctuate unlike fuel prices.
- There will be transparency since drivers can clearly see the exact number of miles they have driven and the total amount payable.
Potential Drawbacks of Pay-Per-Mile
- Privacy – Some systems might use GPS tracking, which raises questions about possible government monitoring. However, many states are choosing to use less complicated odometer checks.
- Equity – Long-distance commuters and rural residents may end up paying much more, sparking discussions about justice.
- Implementation Costs – States must account for the high expense of setting up and maintaining these new systems.
And despite these challenges, the new system is gaining popularity because the old one can no longer sustain demand.
What Drivers Should Expect
For now, most states still rely heavily on gas taxes. However, the momentum toward road usage charges is undeniable. Hawaii and Oregon are the first to mandate them, with more states expected to follow within the decade. California, Washington, and other high-EV adoption states are especially likely to adopt similar measures soon.
This means that within the next 5–10 years, American drivers could be taxed more based on how much they drive. For electric car owners who have not been paying fuel taxes, the new system ensures road funding keeps pace with changing vehicle technology.
Conclusion
The system used to collect taxes for road maintenance will undergo significant change with the implementation of the pay-per-mile system. The Pay-Per-Mile program has already started in Oregon and Hawaii, and other states are preparing to join.
This approach may provide the consistent and fair revenue stream needed to sustain the development of infrastructure as automobiles become electric and more fuel-efficient.