If you already own an electric vehicle, you’re not alone — over 3.5 million people in the United States have registered EVs, with nearly 300,000 new ones sold in just the first quarter of 2025, as reported by Kelley Blue Book and Cox Automotive.
But now, proposed mega legislation, known as the One Big Beautiful Bill Act, from Republicans in the U.S. House of Representatives could soon hit your wallet with a new annual federal fee to raise more than $800 million a year for the Highway Trust Fund.
Lawmakers say the fee is needed as more drivers opt for electric vehicles and gas tax revenues shrink.
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Regarding the proposal, House Transportation Committee Chairman Sam Graves said in a statement: “For far too long, EVs have operated on our nation's roads without paying into the system. Plain and simple, this is a fairness issue, and it's time these roadway users pay their share for the use of the road.”
Worth noting: This idea isn’t new. Many states already charge annual fees for EV owners, typically ranging from $100 (like in California and Illinois) to $250 (e.g., in New Jersey).
Still, the proposed federal fee would match the highest in the U.S., and if approved, apply to all EV owners, regardless of when they purchased their vehicle. Hybrid vehicle owners would also face a new $100 annual fee under the bill.
And some infighting between President Trump and his ally, Elon Musk, has recently added to the mix.
Here’s more of what you need to know.
House GOP approves new $250 EV fee: What it means
A sweeping tax and spending bill recently passed by the House (now under consideration in the U.S. Senate) includes a new $250 annual federal fee for electric vehicle (EV) owners, regardless of when they bought their car.
As mentioned, the fee would be collected by the Federal Highway Administration and is intended to ensure EV drivers contribute to the Highway Trust Fund. That fund is traditionally supported by gas taxes paid by drivers of internal combustion vehicles.
However, consumer advocates point out that the proposed $250 fee is actually more than three times what a typical new gas-powered car owner pays in federal gas taxes each year.
The federal gas tax is 18.4 cents per gallon and hasn’t changed since 1993. That means most drivers pay far less than $250 a year toward highway maintenance.
- If the $250 annual EV fee is approved, it would go into effect as soon as the bill is signed into law.
- However, the exact timing for when owners would begin paying the fee depends on how quickly the Federal Highway Administration finalizes the rules and sets up the payment system.
- The bill instructs the FHWA Administrator to establish the process for collecting the fee after the law is enacted, so there may be a short phase-in period before owners are required to pay.
It’s also important to note that the House version of Trump’s "big beautiful bill" doesn’t stop at new EV fees. It includes two other major changes that, if approved, could impact the car market.
Elimination of EV tax credits
The House bill would phase out the federal tax credit for new electric vehicles, worth up to $7,500, after 2026.
- However, for most vehicles, the credit would actually disappear at the end of 2025, since it would only remain for automakers that have sold fewer than 200,000 EVs.
- Used EV credits, worth up to $4,000, would be eliminated outright at the end of 2025.
This marks a return to pre-Inflation Reduction Act rules and could significantly impact affordability for new EV buyers.
New car loan interest deduction
As Kiplinger has reported, the House GOP bill also introduces a temporary above-the-line deduction for car loan interest, capped at $10,000, for loans taken out on eligible vehicles in 2025 through 2028.
The deduction phases out for single filers earning over $149,000 and joint filers over $249,000, and only applies to loans for vehicles assembled in the United States.
While the deduction could provide relief for some buyers, it’s limited in duration and scope, and it’s not yet clear if it will apply to used cars as well.
For more information, see New GOP Car Loan Deduction: Which Vehicles and Buyers Qualify.
Trump Musk fallout and Tesla stock
Tesla CEO Elon Musk (formerly of Department of Government Efficiency, DOGE, fame) has recently been critical of the House GOP tax mega reconciliation bill, calling it a “disgusting abomination.”
The Congressional Budget Office says the bill will add $2.4 trillion to the deficit.
On X (formerly Twitter), Musk wrote, “Shame on those who voted for it: you know you did wrong.”
Trump fired back on Truth Social, suggesting Musk’s outrage was really about the bill’s plan to eliminate the $7,500 federal tax credit for electric vehicles — a move Trump implied could hit Tesla’s bottom line hard.
As the two traded barbs, Tesla’s stock took a nosedive on June 5, plunging more than 14% and wiping out over $150 billion in market value.
Notably, Tesla was already facing business headwinds.
- Tesla’s stock had dropped nearly 18% year-to-date, and the company’s global sales have fallen.
- May data showed a 36% year-over-year drop in Germany and a 15% decline in China.
Despite his recent criticism, Musk has previously seemed to support the Trump administration’s approach to EV policy.
While Musk has warned that ending the EV tax credit could “devastate” the broader EV market, he has also previously suggested that Tesla could ultimately weather the changes better than some competitors.
What’s next for EV owners and car buyers?
If the bill becomes law, current and future EV owners will face higher annual costs and lose access to federal purchase incentives. At the same time, only some buyers would benefit from the new car loan interest deduction if it's enacted.
For now, while the U.S. Senate considers the House GOP proposal, EV owners should prepare for the likelihood of new annual fees and the possible end of tax credits that have made electric vehicles more affordable for some in recent years.
This article has been updated to include information about Trump and Musk.
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