Electric and Hybrid Car Owners Subject to New Tax

Not long ago, federal and state governments were encouraging people to consider purchasing electric cars by offering certain tax credits. Not only is the federal government eliminating the tax credit for certain vehicles, several states are passing laws imposing a new tax on electric and hybrid car owners. Ohio joins twenty-one other states across the country to require an annual registration for electric and hybrid car. The new law, which became effective January 1, 2020, includes a new $200 annual up-front registration tax for both electric and plug-in hybrids, plus a $100 annual up-front tax for non-plug-in hybrid electric cars.

electric car

The annual registration fees are part of the new Ohio Transportation budget, which was signed by Governor Mike DeWine on April 3, 2019. Also included in the $8.5 billion budget is funding to maintain roads and bridges across the state, as well as support for other transportation-related projects. This new tax accompanies an increase to Ohio’s gas tax—10.5 cents for conventional gas and 19 cents for diesel.

Although electric and hybrid cars made up less than 2% of new car sales in 2018, their market share is expected to increase substantially in the next decade, according to the Associated Press. State legislators hope that the new fees will make up for at least part of the lost gas tax revenue. Lawmakers in support of the new tax reasoned that if conventional car owners have to pay more at the pump, the registration fees would ensure electric and hybrid car owners pay more, too. “Every car on the road has to pay their fair share for the roads they are using,” said Jordan Davis, Director of Smart Columbus.

Those opposing the new tax believe that it will discourage Ohioans from considering fuel-alternative cars. Jason Phillips, the Policy Director for Clean Fuels Ohio, said that “[f]rom what we have seen in other states, anything over $100 per year will slow the market…[the fees] will have terrible consequences for a new market trying to gain a foothold in Ohio.”

If you are interested in this law, or other new or pending legislation, contact Ebony Davenport or one of the attorneys at Pickrel, Schaeffer & Ebeling at (937) 223-1130 to discuss further.

 Jordan Davis, Clean Fuels Ohio, Apr. 17, 2019, https://www.cleanfuelsohio.org/single-post/2019/04/17/Electric-Vehicle-Hybrid-Owners-to-be-Taxed-at-the-Highest-Rate-in-the-Nation.

AUTHOR: Ebony Davenport
edavenport@pselaw.com