As the landscape of electric vehicle (EV) ownership in the United States evolves, a proposed piece of legislation known as the One Big Beautiful Bill Act is poised to introduce significant changes that could impact millions of current and prospective EV owners. With over 3.5 million registered electric vehicles in the country and nearly 300,000 sold in the first quarter of 2025 alone, as reported by Kelley Blue Book and Cox Automotive, the shift towards electric mobility is undeniable. However, lawmakers are now considering a federal annual fee specifically for EV owners as a means to replenish the Highway Trust Fund, a move that could raise more than $800 million each year.
House Transportation Committee Chairman Sam Graves, a key proponent of the proposal, argues that EVs have benefited from the nation’s road systems without contributing adequately to their maintenance. “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,” Graves stated. This sentiment is echoed by many within the legislative body who believe that as more drivers transition to electric vehicles, traditional gas tax revenues are diminishing.
The federal fee, which amounts to $250 annually for electric vehicle owners, is particularly noteworthy as it could be the highest such fee in the nation. Currently, many states impose their own annual fees on EV drivers, typically ranging from $100 in states like California and Illinois to $250 in New Jersey, but the federal initiative would apply universally to all EV owners regardless of their vehicle’s purchase date. Additionally, those who own hybrid vehicles would be subject to a $100 annual fee under the bill.
This proposed fee comes against the backdrop of a broader legislative framework recently passed by the House and now awaiting consideration in the Senate. The Highway Trust Fund has traditionally been supported by gas taxes levied on internal combustion engine vehicles; however, with the increase in electric car ownership, revenue from these taxes has seen a sharp decline. Consumer advocates have raised concerns about the fairness of imposing a $250 fee on EV owners when, on average, drivers of new gasoline-powered vehicles pay significantly less in federal gas taxes annually. The federal gas tax stands at 18.4 cents per gallon—a rate that has remained unchanged since 1993—resulting in many drivers contributing far less than the proposed fee for EV users.
If the bill gains approval, the $250 annual fee would be implemented as soon as the legislation is signed into law. However, the timeline for the fee’s rollout depends on when the Federal Highway Administration (FHWA) finalizes the necessary rules and establishes a payment collection system. According to the bill, the FHWA Administrator will be responsible for developing the process for fee collection post-enactment, indicating a potential transitional period before the fee is enforced.
Beyond the new annual fee, the House proposal introduces two significant alterations that could affect the EV market. Chief among these is the planned elimination of the federal tax credit for new electric vehicles, currently valued at up to $7,500. Under the new bill, this credit would phase out after 2026. However, for most manufacturers, the credit will disappear at the end of 2025, applying only to companies that have sold fewer than 200,000 EVs. Furthermore, the proposed legislation aims to eliminate used EV credits, worth up to $4,000, by the end of 2025. This rollback effectively reverts to the rules that existed prior to the Inflation Reduction Act, potentially raising barriers to affordability for new EV buyers.
Finally, the bill also proposes a temporary above-the-line deduction for car loan interest, allowing deductions of up to $10,000 for loans on qualifying vehicles purchased from 2025 to 2028. This deduction is set to phase out for single filers earning over $149,000 and joint filers earning over $249,000, and will only apply to vehicles assembled in the United States. While these measures could bring some financial relief to specific buyers, their limited duration and stringent criteria raise questions about their overall impact on the EV market and consumer behavior.
Amid these legislative developments, prominent figures in the electric vehicle industry are voicing their concerns. Elon Musk, CEO of Tesla, has criticized the House GOP tax package, describing it as a “disgusting abomination” and expressing discontent with the potential ramifications of its enactment. The Congressional Budget Office has projected that the bill will add an estimated $2.4 trillion to the nation’s deficit, a point of contention among lawmakers. In a post on X (formerly Twitter), Musk condemned the actions of legislators supporting the bill, stating, “Shame on those who voted for it: you know you did wrong.”
Musk’s comments arrive at a challenging time for Tesla, as the company faces various market pressures, including a nearly 18% decline in its stock value year-to-date and a notable drop in global sales figures. Recent data indicates a 36% year-over-year decrease in sales in Germany and a 15% decline in China, shedding light on the broader headwinds the company must navigate.
As the Senate deliberates over the House’s proposal, EV owners and potential buyers are left to ponder the implications of the proposed federal fee and the potential demise of federal tax incentives that have made electric vehicles more attainable. Should the legislation pass, current and future EV owners will face heightened costs, confronting a landscape where federal purchase incentives may vanish altogether. This evolving scenario underscores the need for consumers to remain informed and prepared for changes that may influence the affordability and accessibility of electric vehicles in an increasingly electrified automotive market.