Gasoline Tax
Gas Taxes and Electric Vehicles

I laugh when people gripe about “the government.” In few countries around the globe is there a less-cohesive, less-organized governing system than in the U.S. And, in few places is that system so entirely at odds with itself. I’m not talking about Right and Left philosophy; I’m talking about various and sundry units of government operating to achieve completely opposite goals. We are not subject to “the government,” but to countless bureaucratic subentities, none of which play nicely enough together to ever act in a truly conspiratorial manner. Before I continue, consider this:

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Gas Taxes and Electric Vehicles

Tax Facts

  • There are 6963 taxing bodies in Illinois. (highest of all states)
  • (As an Illinois resident, I’d love to know what the Salt Creek Park District is. As there is no town of Salt Creek—though there is a Salt Creek—it seems to me the whatever parks are handled by the institution could simply be managed by the municipalities in which they exist. Call me crazy. But, I digress.)
  • There are 91,000 government bodies in the U.S.
  • Of the $700 billion in annual gasoline sales in the U.S., the federal government nets approximately $40 billion in tax revenue.
  • In most parts of the U.S., gasoline is subject to federal, state, county, and municipal tax. Those taxes are often higher If that fuel is diesel, or isn’t cut with at least ten percent ethanol.
  • Roughly 40 percent of the price of a gallon of gas is tax.
  • Electric vehicles need no gas (remember this point)

Use Tax

Often described as a “use tax,” gasoline taxes provide revenue for countless operations, including road and highway maintenance, airport renovations, and, counterintuitively, federal tax credits for electric vehicles.

I say counter intuitively, because “the government” is incentivizing the purchase of vehicles that will not be contributing to public coffers via gasoline taxes. And, likewise, government bodies that stand to lose gasoline-tax revenue are working to make up that deficit by, you guessed it, taxing electric vehicles.

Illinois residents pay some of the highest gas taxes in the nation. Though California’s per-gallon gas-specific tax is higher ($.779 vs. .665), folks in the Land of Lincoln are also charged the state’s regular sales tax ($.025).

Gasoline Taxes

Here’s a quick look at the per-gallon taxes applied to gas as purchased in the City of Chicago:

  • Federal: $.184
  • Illinois: $.665
  • Cook county: $.51
  • Chicago: $.08

Plus, Illinois gas is subject to the aforementioned regular Illinois sales tax, which on a $3.75 gallon of gas comes to about $.25.

This means that when a car owner switches from a gas-powered car that averages 25 mpg to an electric vehicle, “the government” loses about $900 a year in gasoline-tax revenue. Switching from a vehicle that averaged only 20 mpg raises the lost gas-tax revenue roughly $1150.

EV Taxes

As noted above, this money does not all go into the same pot, but the loss is the same, and the need to replace those funds is very real.

We have already seen states raise the cost of registering an EV. By our count, 16 states have doubled the cost of new-EV registration relative to the cost of registering a conventional gas-powered car or truck. Most dramatically, the state of Washington charges car owners $75 to register their conventionally powered vehicles, but charges EV owners $225.

And, things are likely to get worse for EV owners, which, someday, will include most of us. Taxing cars—and things car related—has become a relatively easy way to plug holes in government budgets–a little like taxing cigarettes and liquor. The move to electric vehicles isn’t going to shield EV owners from the expectation that their environmentally friendly rides produce similar contributions to the institutional coffers. What else can be taxed? We’re glad you asked:

  • Public charging
  • Electricity
  • City stickers
  • License plates
  • Replacement batteries

Budget Gaps

There’s even talk of supplemental electricity tax for EV owners. Let’s hope it stays talk, but from the perspective of a legislator, a charging tax (home or public) could fill a lot of budget gaps, and conveniently at the specific expense of those dodging gasoline taxes.


We’re not saying that “the government” has nefarious intent in seeking to tax EVs, we’re just pointing the apparent hypocrisy of, on one hand, incentivizing Americans to purchase electric vehicles, and then on the other hand, scrambling to find way to tap EV owners for lost gas-tax revenue.

Note: We’re not in any way looking to dissuade anyone from purchasing an electric vehicle. And, assuming you can charge your car at home, you will enjoy very really savings in terms of “fuel” costs. What we are suggesting is that, given enough time, Uncle Sam, and all his little regional friends, will find a way to extract just as much tax revenue from EV owners as they now squeeze out of conventional-vehicle owners.

So, if your EV came with the federal $7500 tax credit, enjoy it. Or, put some of it in the bank, you’re going to eventually need it. And, “the government” wants it.

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