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 proposed mega legislation, known as the One Big Beautiful Bill, from Republicans in the U.S. House of Representatives could have 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, which did not make it into the final version of the bill passed on July 4, 2025, would have matched the highest in the U.S. and would have applied to all EV owners, regardless of when they purchased their vehicle. Hybrid vehicle owners would also have faced a new $100 annual fee under the proposal.
Here’s more of what you need to know.
House GOP proposed $250 EV fee
The original House GOP version of Trump's sweeping tax and spending bill included a new $250 annual federal fee for electric vehicle (EV) owners, regardless of when they bought their car.
As mentioned, if approved, the fee would have been 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 pointed out that the proposed $250 fee was 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 had been approved, it would have gone into effect as soon as the bill was signed into law.
- However, the exact timing for when owners would have had to pay the fee would depend on how quickly the Federal Highway Administration finalizes the rules and sets up the payment system.
- The proposal instructed the FHWA Administrator to establish the process for collecting the fee after the law was enacted, so there might have been a short phase-in period before owners were required to pay.
It’s also important to note that the House GOP version of Trump’s "big beautiful bill" didn't stop at new EV fees. It includes two other major changes that made it into the final bill and 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. (The final bill ends this credit after September 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. That provision is in the final OBBB legislation enacted on July 4, 2025.
The deduction is subject to income phase-outs 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.
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 GOP tax mega reconciliation bill, calling it a “disgusting abomination.”
The Congressional Budget Office says the bill could add $3 trillion or more 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?
Since the so-called One Big Beautiful Bill has become law, car buyers could lose access to federal purchase incentives. At the same time, only some buyers would benefit from the new temporary auto loan interest tax deduction.
This article has been updated to reflect the passage of the OBBB.
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