Sponsors (3)
The bill secures new, dedicated funding and legal authority for collecting an EV/battery tax to bolster the Highway Trust Fund, but does so at the cost of higher consumer prices for EVs, potential slowing of EV adoption, and added administrative burdens.
State and local governments and road users will receive additional, dedicated revenue for roads and transit because the bill directs EV and battery sales tax revenue into the Highway Trust Fund starting in 2026.
Taxpayers and federal tax administrators gain legal clarity because the bill creates a statutory home for an EV/battery tax, enabling the IRS and Treasury to write implementing rules and collect revenues.
Buyers of electric vehicles and batteries (and the taxpayers who ultimately bear those costs) may face higher purchase prices if sellers pass the tax through, increasing transportation costs for consumers and small businesses.
Consumers—especially in rural areas—may be discouraged from adopting EVs because the tax raises the relative cost of EV ownership versus gasoline vehicles, potentially slowing EV uptake.
Small businesses that sell vehicles and batteries and the IRS will face new compliance and administrative burdens to implement, report, and collect the new tax category.
Based on analysis of 2 sections of legislative text.
Introduced February 12, 2025 by Debra Fischer · Last progress February 12, 2025
Creates a new federal tax on the sale of electric vehicles and batteries and directs the revenue from that tax into the Highway Trust Fund. The law adds a new tax provision (placed at section 4091 of the Internal Revenue Code) and amends the Highway Trust Fund transfer rules so proceeds from the new tax are deposited into the Trust Fund for highway use. The change applies to sales after December 31, 2025. The text provided sets the statutory location and the routing of revenue but does not specify the tax rate, taxable base, definitions, collection procedures, or enforcement details, leaving key implementation specifics to be determined later by regulation or further legislation.