Key Findings

• The Freeway Belief Fund, created in 1956 to finance the Interstate Freeway System and different roads by way of gasoline excise taxes, has relied on basic income transfers for practically 20 years.
• The funding shortfall stems from a number of traits: the gasoline taxA gasoline tax is often used to explain the number of taxes levied on gasoline at each the federal and state ranges, to supply funds for freeway restore and upkeep, in addition to for different authorities infrastructure initiatives. These taxes are levied in just a few methods, together with per-gallon excise taxes, excise taxes imposed on wholesalers, and basic gross sales taxes that apply to the acquisition of gasoline. has not been adjusted for inflationInflation is when the final worth of products and companies will increase throughout the financial system, decreasing the buying energy of a forex and the worth of sure belongings. The identical paycheck covers much less items, companies, and payments. It is usually known as a “hidden tax,” because it leaves taxpayers much less well-off resulting from increased prices and “bracket creep,” whereas growing the federal government’s spendin, autos have change into extra fuel-efficient, and electrical automobile adoption has grown. Industrial visitors has additionally underpaid relative to the wear and tear and tear it imposes on highways.
• With out reform, freeway spending will exceed freeway income by $17 billion in 2026. The following five-year reauthorization of freeway funding, due in September 2026, affords a possibility to right the funding imbalance.
• Restoring the user-pays precept would make freeway funding fiscally accountable and economically environment friendly.
• We current 4 reform choices that might shut the 2026 funding hole and transfer towards a user-based construction. The perfect reform can be changing present transportation taxes with a automobile miles traveled (VMT) taxA tax is a compulsory fee or cost collected by native, state, and nationwide governments from people or companies to cowl the prices of basic authorities companies, items, and actions. that adjusts by automobile weight per axle, however wanting that, a number of transitional choices may strengthen funding and transfer nearer towards the user-pays precept.
• Examples from different nations and US states present that well-designed person charges can fund transportation infrastructure successfully.

Introduction

Present freeway authorization is scheduled to run out on September 30, 2026.[1] The legislative course of for reauthorization is a chance to deal with structural issues with transportation funding and income assortment.

For nearly 20 years, freeway expenditures have exceeded Freeway Belief Fund (HTF) income, which consists primarily of federal excise taxes on motor fuels—18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel.[2] Initially, the discrepancy between income and expenditures might be blamed on a quirk of the HTF. A small portion of income generated from taxes on freeway customers is reallocated to help mass transit initiatives beneath the auspices of the HTF’s Mass Transit Account. However lately, whole income collections to the HTF, together with the income diverted to mass transit, haven’t even matched the spending devoted to highways. The Congressional Price range Workplace (CBO) initiatives the HTF will accumulate $44.2 billion in freeway income in 2026, whereas it can spend $61.4 billion—leaving a $17.2 billion hole.[3]   

The newest freeway funding authorization, enacted in 2021 by way of the Infrastructure Funding and Jobs Act (IIJA, or the Bipartisan Infrastructure Legislation), made no effort to lift further freeway income.[4] As an alternative, IIJA relied on basic fund transfers for its new freeway spending. The following reauthorization ought to take a extra fiscally accountable method.

Why Person Charges?

Person charges are a type of advantages taxes that hyperlink fee to make use of: the individuals who profit from transportation infrastructure are those who pay for it.[5] Charging customers is a extra economically environment friendly option to finance transportation infrastructure than financing transportation by way of unrelated taxes, such because the earnings tax.

If one transportation mode is supported by basic revenues whereas a second is completely reliant on person charges, then individuals and cargo will shift to the primary mode to keep away from straight paying. Below person charges, no such distortion would happen, leading to impartial remedy throughout completely different modes of transportation.

Even accepting the user-pays precept, transportation funding faces two main design challenges: satisfactory income and cost-fee alignment. Taxes and costs on freeway customers ought to cowl freeway spending, and charges ought to replicate the wear and tear and tear attributable to various kinds of autos. Individuals who drive extra miles or heavier autos impose increased prices and will due to this fact pay extra.

Freeway funding within the United States fails on each counts.

First, revenues don’t cowl prices. The first gasoline taxes haven’t been adjusted for inflation since 1993, whereas autos have change into extra fuel-efficient, decreasing tax collections per mile pushed. Rising adoption of electrical autos (EVs) has additionally shrunk the tax baseThe tax base is the overall quantity of earnings, property, belongings, consumption, transactions, or different financial exercise topic to taxation by a tax authority. A slender tax base is non-neutral and inefficient. A broad tax base reduces tax administration prices and permits extra income to be raised at decrease charges.. Though EVs at present make up a small fraction of whole automobile mileage, their dramatic adoption will speed up future income declines.[6]

Second, taxes are misaligned with prices. Heavy vans are undercharged relative to the injury they trigger, which means freight journey is underpriced.[7] The implicit subsidy for delivery cargo over roads (supported by transfers from the final fund) as an alternative of freight rail (which is privately owned and operated) contributes to higher congestion and highway put on.[8]   

Becoming into the Greater Image

Whereas the HTF’s shortfall is critical, the nation’s general fiscal challenges are far higher. The HTF is projected to run a $17 billion shortfall in 2026, in comparison with the general authorities finances deficit of $1.7 trillion.[9]

Addressing the federal authorities’s fiscal imbalance would require reforms to main entitlement applications and, seemingly, broad tax will increase.[10] Fixing the HTF is not going to clear up the larger downside, nevertheless it is a chance for lawmakers to undertake insurance policies that enhance effectivity and sustainability in a single nook of the finances.

The Resolution

The answer to each insufficient person prices and the underpricing of freight visitors is a per-mile payment that scales with the quantity of harm a automobile imposes on roads. Such insurance policies are often called highway person prices (RUCs), highway person charges (RUFs), freeway person charges (HUFs), or automobile miles traveled (VMT) taxes or charges. This paper refers to them collectively as VMT taxes or VMT charges.

Engineering research constantly present that bigger autos impose extra injury disproportionate to their weight (or extra particularly, weight per axle). The exact variations between giant vans and customary autos are much less clear. One broadly cited examine prompt an 80,000-pound truck with 5 axles imposes roughly 9,600 instances extra injury per vehicle-mile than a 4,000-pound passenger automotive with two axles. Different research discover the ratio could also be nearer to 300-to-1.[11] Even beneath the extra conservative estimates, heavy autos ought to pay a considerably increased tax price per vehicle-mile.

Oregon affords among the best home examples of a VMT tax for industrial visitors, that includes an in depth schedule of charges that adjust by automobile weight and axle rely, together with for autos above 80,000 kilos of gross automobile weight.[12] In September 2025, Oregon’s legislature handed a transportation invoice that will reform Oregon’s VMT construction, although as of this paper’s writing, it awaits the governor’s signature.[13]

A Notice on Income Scoring

When modeling the income results of excise taxes, we account for earnings and payroll taxA payroll tax is a tax paid on the wages and salaries of staff to finance social insurance coverage applications like Social Safety, Medicare, and unemployment insurance coverage. Payroll taxes are social insurance coverage taxes that comprise 24.8 p.c of mixed federal, state, and native authorities income, the second largest supply of that mixed tax income. offsets. An oblique taxAn oblique tax, in contrast to a direct tax such because the earnings tax, is a tax collected on a product by the retailer or producer; nonetheless, the top client of the ultimate product in the end bears a lot of the burden by way of the upper worth of or service. Gross sales and value-added taxes (VATs) are two examples of oblique taxes. on gross sales or miles pushed reduces the tax base for earnings and payroll taxes, thus decreasing how a lot income they increase.[14] We estimate the earnings and payroll tax offset averages round 24 p.c throughout the finances window.

Within the context of the HTF, a tax enhance that closes the hole between freeway spending and revenues flowing into the belief fund may have a smaller impact on the general finances deficit due to the earnings and payroll tax offset. For instance, a tax enhance that resulted in $1 flowing into the belief fund would scale back earnings and payroll taxes by 24 cents, leading to 76 cents of general finances deficit discount.

For every choice, we’ve got introduced the gross HTF income enhance (earlier than making use of the offset) and the standard income estimate (after making use of the offset). We calibrated the speed schedules for every choice to roughly shut the HTF’s projected $17 billion hole in 2026.  For Choices 1 and 4, we additionally current the overall (not simply the rise) in HTF income raised by class of auto visitors in 2026.

Possibility 1: The Full VMT tax

Our proposed VMT tax absolutely replaces present HTF taxes. It prices increased charges to heavier autos, higher representing the injury they impose, leading to minimal tax will increase on passenger journey whereas additionally closing the EV gap.

Over the following decade, the VMT tax would increase $270 billion for the HTF and scale back general deficits by $206 billion. It could increase sufficient income to totally fund freeway outlays in 2026, and resulting from inflation indexingInflation indexing refers to automated cost-of-living changes constructed into tax provisions to maintain tempo with inflation. Absent these changes, earnings taxes are topic to “bracket creep” and stealth will increase on taxpayers, whereas excise taxes are susceptible to erosion as taxes expressed in nominal {dollars}, somewhat than charges, slowly lose worth., modestly exceed projected freeway outlays later within the finances window.

Desk 1. 10-12 months Typical Income Estimates of Absolutely Changing Present HTF Taxes with a VMT Tax

Supply: Authors’ calculations; EIA Annual Vitality Outlook 2025, “Desk 41. Mild-Responsibility Automobile Miles Traveled by Expertise Sort” and “Desk 49. Freight Transportation Vitality Use”; Bureau of Transportation Statistics, “Annual Automobile Distance Traveled in Miles and Associated Knowledge by Freeway Class and Automobile Sort: 2023”; Oregon Division of Transportation, “Mileage Tax Charges Efficient Jan. 1, 2022”; Environmental Safety Company, “Common Annual Automobile Miles Traveled by Main Automobile Class”; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035”; Tax Basis Common Equilibrium Mannequin.

An in depth rationalization of the speed schedule seems within the appendix. For autos beneath 26,000 kilos, the tax price is decided by a system primarily based on gross automobile weight ranking (GVWR). For autos above 26,000 kilos, the charges are primarily based on Oregon’s freight VMT tax system. We additionally modify the charges for inflation over the following decade.

For example, Desk 2 exhibits common tax charges for various classes of autos in 2026 beneath our proposed full VMT tax. Automobiles with a GVWR of 5,000 kilos, like a small crossover SUV, would face a mean price of 0.89 cents per mile. The industrial truck price of 10.4 cents would apply to a truck with a GVWR of between 44,000 and 46,000 kilos. Smaller autos inside every class would face decrease per-mile charges, and bigger autos would face increased charges.

Desk 2. Income Collected from Full VMT Tax by Automobile Class, 2026

Supply: Authors’ calculations; EIA Annual Vitality Outlook 2025, “Desk 41. Mild-Responsibility Automobile Miles Traveled by Expertise Sort” and “Desk 49. Freight Transportation Vitality Use”; Bureau of Transportation Statistics, “Annual Automobile Distance Traveled in Miles and Associated Knowledge by Freeway Class and Automobile Sort: 2023”; Oregon Division of Transportation, “Mileage Tax Charges Efficient Jan. 1, 2022”; Environmental Safety Company, “Common Annual Automobile Miles Traveled by Main Automobile Class”; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035”; Tax Basis Common Equilibrium Mannequin.

At present, industrial vans pay roughly 4 cents per mile in gasoline taxes, plus small further per-mile prices from the excise taxAn excise tax is a tax imposed on a selected good or exercise. Excise taxes are generally levied on cigarettes, alcoholic drinks, soda, gasoline, insurance coverage premiums, amusement actions, and betting, and usually make up a comparatively small and unstable portion of state and native and, to a lesser extent, federal tax collections. on truck tires.[15] In addition they pay gross sales taxA gross sales tax is levied on retail gross sales of products and companies and, ideally, ought to apply to all closing consumption with few exemptions. Many governments exempt items like groceries; base broadening, reminiscent of together with groceries, may maintain charges decrease. A gross sales tax ought to exempt business-to-business transactions which, when taxed, trigger tax pyramiding.  on heavy vans and trailers and a flat freeway use payment.

Below the proposed VMT tax, vans would pay a mean tax of 10.4 cents per mile. That’s a considerable enhance in comparison with the established order, nevertheless it’s conservative relative to the estimated price of truck journey between 4 and 40 cents per mile relying on automobile weight ranking.[16] Importantly, vans would now not face the truck gross sales tax, the flat freeway use payment, the tire excise tax, or the diesel gasoline tax beneath this selection.

Passenger vehicles would see solely modest adjustments. Take the proprietor of a compact sedan with a GVWR of three,800 kilos and gasoline financial system of 35 miles per gallon. In the event that they drive 14,000 miles in a 12 months, they eat 400 gallons of gasoline and pay about $74 in federal gasoline tax yearly. Below the proposed VMT tax system, they might pay a price of0.66 cents per mile, and their annual tax legal responsibility can be round $92.

This feature would impose minimal burdens on passenger automotive drivers, notably these with conventionally powered autos. A price schedule that assumed higher relative injury from heavy vans may maintain passenger vehicles innocent and even end in a web tax minimize.

Possibility 2: Truck VMT Payment, Flat EV Payment, Larger Fuel Tax

The complete VMT tax accomplishes a number of key objectives: it correctly costs freight visitors, eliminates the EV gap within the tax base, and raises sufficient income to match freeway outlays.

Instantly introducing a VMT tax for all autos could also be administratively or politically troublesome. The following greatest choice to a full VMT tax is a VMT tax for industrial truck visitors paired with incremental adjustments to passenger automotive taxation.

Possibility 2 proposes the identical VMT tax for industrial vans as Possibility 1, absolutely changing present truck taxes, together with the tax on diesel gasoline. It could additionally introduce a $100 annual payment for passenger electrical autos and lift the gasoline tax from 18.4 cents to twenty.4 cents per gallon. The industrial VMT tax, the EV payment, and the gasoline tax can be inflation-indexed.

This hybrid method achieves practically all of the goals of the total VMT tax. Its major limitation is {that a} flat EV payment doesn’t range with miles pushed, so low-mileage EV drivers would overpay and high-mileage EV drivers would underpay.

Possibility 2 has comparable income results as the total VMT tax. It could increase greater than $250 billion for the HTF over the following decade and scale back general deficits by $190 billion. Income would develop barely extra slowly than the total VMT tax, however the income raised would nonetheless be ample to get rid of the HTF shortfall in 2035.

Desk 3. 10-12 months Typical Income from Changing Truck Excise and Diesel Tax with VMT-Based mostly Tax, Elevating Fuel Tax to twenty.4 Cents, Introducing $100 Registration Payment for EVs, All Listed for Inflation

Supply: Authors’ calculations; EIA Annual Vitality Outlook 2025, “Desk 41. Mild-Responsibility Automobile Miles Traveled by Expertise Sort” and “Desk 49. Freight Transportation Vitality Use”; Bureau of Transportation Statistics, “Annual Automobile Distance Traveled in Miles and Associated Knowledge by Freeway Class and Automobile Sort: 2023”; Oregon Division of Transportation, “Mileage Tax Charges Efficient Jan. 1, 2022”; Environmental Safety Company, “Common Annual Automobile Miles Traveled by Main Automobile Class”; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035”; Tax Basis Common Equilibrium Mannequin.

Possibility 3: Elevate the Gas Taxes

Possibility 3 would increase the prevailing gasoline and diesel tax charges to shut the HTF funding hole. Elevating the gasoline tax from 18.4 cents to twenty-eight cents per gallon and elevating the diesel tax from 24.4 cents to 40 cents per gallon would generate sufficient income to cowl freeway outlays in 2026. Each charges can be inflation-indexed.

Elevating present taxes would require no new administrative or compliance initiatives. Nonetheless, continued reliance on the gasoline tax leaves freight underpriced and the EV hole within the tax base unresolved. That undermines the aim of impartial remedy throughout automobile varieties and means the coverage shouldn’t be future-proof. As EV adoption continues, the hole will widen and the deficit will reemerge.

Possibility 3 would generate $188 billion for the HTF over the following decade and scale back general deficits by $143 billion. The quantity of further income collected really declines later within the 10-year finances window, regardless of inflation changes, as a result of the tax base is projected to shrink. Whereas income would exceed freeway outlays in 2026 beneath this selection, the deficit would find yourself returning in 2028 and would rise to over $15 billion by 2035, nearly the identical deficit the HTF faces as we speak.  

Desk 4. 10-12 months Typical Income Estimate for Elevating Fuel and Diesel Taxes

Supply: Authors’ calculations; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035,” Jan. 17, 2025, https://www.cbo.gov/publication/60870; Tax Basis Common Equilibrium Mannequin.

Possibility 4: Flat Registration Charges

Possibility 4 would substitute all present HTF taxes with annual registration charges that adjust by gross automobile weight ranking.

This can be a radical reform choice with a number of benefits. Flat annual registration charges can be easier than the present mixture of HTF taxes and be insulated from the shift towards EVs, offering a steady income.

Nonetheless, it has some apparent issues too. Whereas all drivers would contribute to highway upkeep, the payment wouldn’t range by mileage—somebody who drives 5,000 miles a 12 months would pay the identical payment as somebody who drives 25,000 miles. With out accounting for miles pushed, a flat registration payment can be a weaker person paymentA person payment is a cost imposed by the federal government for the first goal of masking the price of offering a service, straight elevating funds from the individuals who profit from the actual public good or service being supplied. A person payment shouldn’t be a tax, although some taxes could also be labeled as person charges or carefully resemble them. mannequin than the gasoline tax, no less than for non-EVs.

Possibility 4 would generate $237 billion for the HTF over the following decade and scale back general deficits by $181 billion. Income practically matches freeway outlays even in 12 months 10, and it continues to develop because the automobile inventory expands, notably amongst industrial autos.      

Desk 5. 10-12 months Typical Income Estimate for Flat Registration Charges Changing All Freeway Belief Fund Income

Supply: Authors’ calculations; EIA Annual Vitality Outlook 2025, “Desk 39. Mild-Responsibility Automobile Inventory by Expertise Sort” and “Desk 49. Freight Transportation Vitality Use”; Bureau of Transportation Statistics, “Annual Automobile Distance Traveled in Miles and Associated Knowledge by Freeway Class and Automobile Sort: 2023”; Environmental Safety Company, “Common Annual Automobile Miles Traveled by Main Automobile Class”; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035”; Tax Basis Common Equilibrium Mannequin.

A full schedule of registration charges seems within the appendix. To generate income estimates, we used common weights for various courses of autos. The common passenger automotive price of $118.84 applies to autos with GVWRs between 4,000 and 6,000 kilos. The common industrial truck price of $2,079.73 applies to vans with GVWRs between 44,000 kilos and 46,000 kilos. We assume 1 p.c of the automobile inventory for each vans and passenger autos is a part of public sector fleets.

Desk 6. Income Collected by Registration Charges per Class, 2026

Supply: Authors’ calculations; EIA Annual Vitality Outlook 2025, “Desk 39. Mild-Responsibility Automobile Inventory by Expertise Sort” and “Desk 49. Freight Transportation Vitality Use”; Bureau of Transportation Statistics, “Annual Automobile Distance Traveled in Miles and Associated Knowledge by Freeway Class and Automobile Sort: 2023”; Environmental Safety Company, “Common Annual Automobile Miles Traveled by Main Automobile Class”; Congressional Price range Workplace, “The Price range and Financial Outlook: 2025 to 2035”; Tax Basis Common Equilibrium Mannequin.

How Do These Choices Change the Freeway Belief Fund’s Fiscal Image?

Taken collectively, the 4 choices illustrate how completely different approaches to freeway funding would—or wouldn’t—present a long-term fiscal answer to the HTF’s shortfall. 

Analyzing whole HTF income per 12 months beneath every choice, somewhat than specializing in the change in revenues flowing into the belief fund or the standard income estimate, supplies a clearer image of every choice’s relative effectiveness.

The chart beneath compares projected freeway outlays, projected freeway revenues, and whole freeway revenues beneath the 4 choices. Choices 1, 2, and 4 all outperform the gasoline tax enhance (Possibility 3). All 4 choices increase sufficient income to match freeway outlays in 2026, however the deficit reappears in a short time beneath Possibility 3, whereas the opposite choices proceed to roughly match spending all through the 10-year finances window.

That stated, elevating the gasoline and diesel taxes would nonetheless go away the HTF in a stronger place than one other reauthorization that depends on basic fund transfers.

Partial Choices

Every choice we modeled affords a option to match freeway spending to freeway income, no less than in 2026. The strongest choice is the total VMT tax, however Possibility 2 (the mixture of the truck-based VMT tax, the next gasoline tax, and EV registration charges) comes shut. The opposite choices are much less structurally sound however nonetheless present short-term fiscal options.

Wanting closing the hole completely, different reforms may enhance the belief fund’s fiscal scenario and shift extra prices towards customers.

For instance, in Might 2025, the preliminary Home model of the One Massive Lovely Invoice Act included new registration charges for all passenger autos: $20 per 12 months for inside combustion engine (ICE) autos, $100 for hybrids, and $200 for EVs. The Transportation and Infrastructure Committee’s markup draft eradicated the ICE automobile payment however elevated the EV registration payment to $250.

We estimated the ultimate Home model would increase $78 billion from 2026 by way of 2035 for the HTF, and scale back the general finances deficit by $58 billion.[17] The coverage was later eliminated within the Senate.[18]

One other proposal from 2025, the Truthful SHARE Act, would impose a one-time $1,000 payment on EVs and a $550 payment on battery modules over 1,000 kilos. We estimated it might increase $49 billion in income for the HTF over 10 years, and scale back the general finances deficit by $36 billion.[19]

Each proposals would assist the HTF, however they might not clear up its long-term imbalance. 

Implementation Points: Feasibility, Privateness, and Fairness

Three main concerns form the design of any VMT tax:

1. Administrative feasibility: How nicely may the federal government observe automobile miles traveled and assess legal responsibility?
2. Privateness: Would mileage monitoring infringe on civil liberties?
3. Fairness: Would a VMT tax fall inconsistently on sure populations?

Feasibility and Privateness

Administrative feasibility and privateness typically battle. A number of approaches may help mileage reporting, starting from high-tech gadgets to low-tech guide submissions.

Probably the most exact choice would use GPS monitoring, which may report miles traveled and allocate them amongst jurisdictions whereas exempting non-public roads. However GPS monitoring raises critical privateness issues.

To mitigate privateness issues, a number of state-level VMT tax applications have used third-party private-sector industrial account managers (CAMs). CAMs strip out nonessential information earlier than transmitting combination miles traveled to tax authorities. Although it protects privateness, issues about information storage, safety, and accessibility stay.

Newer autos with superior telematics may use software program or {hardware} to report mileage by jurisdiction whereas holding location information non-public. Comparable gadgets are already widespread in insurance coverage markets, monitoring automobile utilization and discounting insurance coverage for individuals who drive much less or extra safely.[20] This reporting methodology wouldn’t be capable to robotically exempt non-public roads or differentiate between states, however it might shield drivers’ location information.

The bottom-tech answer would contain manually submitting odometer readings or pictures to report miles traveled. This minimizes intrusion however will increase administrative and compliance prices.

On the federal degree, monitoring and privateness dangers may be minimized. Not like states, a federal VMT tax solely requires understanding the overall variety of miles pushed, not the situation. Miles pushed on non-public or international roads would wish exemptions, which might be dealt with by way of guide submissions or a customary deductionThe usual deduction reduces a taxpayer’s taxable earnings by a set quantity decided by the federal government. Taxpayers who take the usual deduction can not additionally itemize their deductions; it serves in its place. for exempt miles pushed. Drivers with increased miles on non-public roads may submit particular claims to forestall overcharging, however many of the compliance and administrative prices might be prevented with an ordinary deduction for personal roads and out-of-country driving.[21]    

If the federal VMT infrastructure is used for state-level applications, extra detailed monitoring could also be required. In that case, a third-party reporting system may allocate miles pushed throughout jurisdictions with out recording particular areas or timestamps.

Administrative Prices

One other feasibility query is how affordably such a tax might be administered. One benefit of the prevailing gasoline tax is its comparatively low administrative and compliance prices as a result of it’s collected upstream from a small variety of taxpayers.[22] A system the place every driver turns into a taxpayer would doubtlessly enhance prices.

For a freight VMT payment, Oregon demonstrates that environment friendly administration is feasible, counting on a mixture of self-reported odometer readings and automatic system information collections. The CBO estimates Oregon’s administrative prices are round $20 per truck per 12 months.[23]

Given {that a} typical heavy industrial truck touring greater than 50,000 miles per 12 months would owe greater than $5,000 beneath our proposed VMT-based taxes in Choices 1 and a couple of, Oregon’s expertise suggests the executive prices can be low relative to the income raised for freight taxpayers. Federal implementation might be much more environment friendly, particularly as a result of many fleets already use digital logging gadgets.

Administrative prices of $10 to $20 per 12 months per taxpayer are insignificant for freight taxpayers, however could also be extra significant for passenger-vehicle homeowners, whose annual tax would seemingly fall between $100 and $200. Automated fee programs or smartphone apps may additional scale back administrative and compliance prices, however the distinction reinforces the case for a freight-first rollout.

Fairness Concerns  

Fairness is one other main concern for transportation taxes, particularly concerning earnings and urban-rural variations.

The present gasoline tax capabilities as a proxy person payment however introduces disparities due to variations in gasoline efficiencies. Larger-income drivers are likely to personal newer, extra fuel-efficient autos, paying much less per mile of highway use. Decrease-income drivers, who usually tend to personal older, much less environment friendly autos, pay extra relative to the highway put on they trigger. The fast rise of electrical autos exacerbates the imbalance, as EVs keep away from the gasoline tax completely.

Equally, rural drivers typically face increased tax burdens as a result of they have an inclination to drive longer distances and fewer environment friendly autos. Though heavier rural autos trigger considerably extra highway put on, this solely partially offsets the disparity.

A VMT tax, notably one which accounts for automobile weight, would higher align prices with highway use and infrastructure prices. By tying tax legal responsibility to miles pushed and injury induced, a VMT tax would scale back regressivity and the urban-rural disparity, restoring the user-pays precept to roads. Empirical evaluation from the Japanese Transportation Coalition’s Section 5 Report helps these findings with research throughout six states.[24]

Whereas a VMT tax would nonetheless have an effect on teams in a different way—rural drivers typically drive additional than city drivers and thus would pay extra—it might be fairer general than the gasoline tax. Differentiating charges by highway kind (for instance, discounting miles traveled on more cost effective rural roads) may additional improve equity, although it might require extra subtle information assortment and lift further privateness issues.

A VMT tax would nonetheless be regressive, nevertheless it represents a extra impartial, equitable, and environment friendly person payment than the present gasoline tax, which disproportionately advantages wealthier, city, and EV drivers.

Conclusion

A VMT tax is probably the most environment friendly and sustainable choice for US freeway funding amid quickly altering markets and applied sciences. It greatest achieves the user-pays precept, aligning taxes paid with precise highway use, automobile weight, and infrastructure prices.

That stated, a full VMT system can be advanced to determine and administer. A hybrid method, changing truck-related excise taxes with a VMT tax on freight, retaining the gasoline tax, and including flat registration charges on passenger visitors, delivers many of the similar advantages with fewer administrative challenges.

Fixing the HTF would require legislative and administrative effort. However an environment friendly, privacy-conscious, and equitable answer is achievable now.  

With the following freeway invoice, lawmakers have the chance to embrace financial effectivity and monetary accountability by returning to the user-pays precept that has lengthy underpinned America’s transportation infrastructure.

[1] U.S. Division of Transportation, “Advancing a Floor Transportation Proposal That Focuses on America’s Most Basic Infrastructure Wants,” Federal Register, Jul. 21, 2025, https://www.federalregister.gov/paperwork/2025/07/21/2025-13663/advancing-a-surface-transportation-proposal-that-focuses-on-americas-most-fundamental-infrastructure.

[2] 0.1 cents per gallon of every gasoline tax is allotted to the Leaking Underground Storage Tank (LUST) Belief Fund.

[3] Congressional Price range Workplace, “Baseline Projections: Freeway Belief Fund Accounts,” January 2025, https://www.cbo.gov/system/information/2025-01/51300-2025-01-highwaytrustfund.pdf.

[4] H.R.3684 – Infrastructure Funding and Jobs Act, https://www.congress.gov/invoice/117th-congress/house-bill/3684.

[5] Alex Muresianu, Adam Hoffer, Jacob Macumber-Rosin, and Alex Durante, “Increasing Person Charges for Transportation: Roads and Past,” Tax Basis, Aug. 7, 2024, https://taxfoundation.org/analysis/all/federal/vehicle-miles-traveled-vmt-tax-transportation/.

[6] Ibid. See additionally Alex Muresianu and Adam Hoffer, “EVs and the Freeway Belief Fund: 5 Issues to Know,” Tax Basis, Mar. 4, 2025, https://taxfoundation.org/weblog/ev-highway-trust-fund/.

[7] Michael Gorman, “A Automobile Mileage Tax for Heavy Vehicles?” Regulation (Winter 2024-2025), https://www.cato.org/websites/cato.org/information/2024-12/regulation-v47n4-3.pdf.

[8] Michael Gorman, “The Financial Prices of Public Subsidies for Freight Transportation,” Info Expertise and Innovation Basis, Sep. 8, 2025, https://itif.org/publications/2025/09/08/the-economic-costs-of-public-subsidies-for-freight-transportation/.

[9] Congressional Price range Workplace, “10-12 months Price range Projections,” January 2025, https://www.cbo.gov/information/budget-economic-data.

[10] William McBride, Erica York, Alex Durante, and Garrett Watson, “The Unsustainable US Debt Course and Impacts of Potential Tax Modifications,” Tax Basis, Jan. 14, 2025, https://taxfoundation.org/analysis/all/federal/us-debt-budget-taxes-spending-social-security-medicare/.

[11] Allan Bradley and Papa-Masseck Thiam, “Evaluation of Automotive and Truck Pavement Impacts,” FP Improvements, October 2018, https://www.trucking.org/websites/default/information/2022-01/Analysispercent20ofpercent20carpercent20andpercent20truckpercent20pavementpercent20impacts-FINAL.pdf.

[12] Oregon Division of Transportation, “Mileage Tax Charges,” https://www.oregon.gov/odot/Varieties/Motcarr/9928-2022.pdf.

[13] Vasili Varlamos, “Two Oregon Senate Democrats Urge Kotek to Signal Transportation Invoice ‘With out Additional Delay,’” KATU 2 ABC, Oct. 27, 2025, https://katu.com/information/politics/two-oregon-senate-democrats-urge-kotek-to-sign-transportation-bill-without-further-delay-salem-portland-politics-taxes-voters-referendum-republicans.

[14] Huaqun Li, Garrett Watson, and Erica York, “Overview of the Tax Basis’s Common Equilibrium Mannequin,” Tax Basis, Mar. 5, 2025, https://taxfoundation.org/analysis/all/federal/general-equilibrium-model/.

[15] Michael Gorman, “A Automobile Mileage Tax for Heavy Vehicles?” Regulation (Winter 2024-2025), https://www.cato.org/websites/cato.org/information/2024-12/regulation-v47n4-3.pdf.

[16] Ibid.

[17] Alex Muresianu, “Fixing Freeway Funding within the Reconciliation Package deal,” Tax Basis, Might 27, 2025, https://taxfoundation.org/weblog/ev-tax-credit-reconciliation-bill-highway-funding/.

[18] Andres Picon, “The EV and Hybrid Payment is Useless—For Now,” E&E Information, Jun. 17, 2025, https://www.eenews.web/articles/the-ev-and-hybrid-fee-is-dead-for-now/.

[19] Alex Muresianu and Adam Hoffer, “EVs and the Freeway Belief Fund: 5 Issues to Know.”

[20] See Daniel Robinson, “Progressive Snapshot,” Marketwatch Guides, Dec. 26, 2023, https://www.marketwatch.com/guides/insurance-services/progressive-snapshot/; Daniel Robinson, “State Farm Drive Protected and Save,” Marketwatch Guides, Jun. 22, 2024, https://www.marketwatch.com/guides/insurance-services/state-farm-drive-safe-and-save/.

[21] Washington State Transportation Fee, “Ahead Drive: Sustaining Washington State’s Transportation System Into the Future,” January 2024, https://waroadusagecharge.org/media/final-report/DIGITAL_WApercent20RUCpercent20Finalpercent20Reportpercent20Januarypercent202024_v2.pdf.

[22] See, as an illustration, Shuting Pomerleau, “Administrative Prices of a Carbon TaxA carbon tax is levied on the carbon content material of fossil fuels. The time period may discuss with taxing different sorts of greenhouse gasoline emissions, reminiscent of methane. A carbon tax places a worth on these emissions to encourage shoppers, companies, and governments to supply much less of them.,” Niskanen Heart, February 2021, https://www.niskanencenter.org/wp-content/uploads/2021/02/Jan28-Administrative-Prices-of-Carbon-Tax.pdf.

[23] Perry Beider and David Austin, “Points and Choices for a Tax on Automobile Miles Traveled by Industrial Vehicles,” Congressional Price range Workplace, October 2019, https://www.cbo.gov/system/information/2019-10/55688-CBO-VMT-Tax.pdf. 

[24] The Japanese Transportation Coalition, “Section 5 STSFA Grant Report,” Fall 2025, https://tetcoalitionmbuf.org/wp-content/uploads/2025/09/TETC-P5-Ultimate-Report_9-17-2025_508.pdf.

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