Illinois' ridiculous $1,000 EV tax is no more, imposes $100 EV tax instead (UPDATED) (2024)

(UPDATE: This article previously stated the EV tax would be $248. It turns out the bill also hikes the registration fee to $148 for all vehicles, but to $248 for EVs specifically. So the “EV Tax” is $100, not $248)

The Illinois legislature has approved a $45 billion transportation bill over the weekend to help improve the state’s infrastructure. Among other things, this bill includes a $100 tax on electric vehicles.

The bill also doubles the state gas tax from 19 to 38 cents to help pay for these improvements. The EV tax does not apply to hybrid vehicles or plug-in hybrids – even if those plug-in hybrids never use any gasoline.

Last month we reported on a proposed $1,000 yearly fee for EVs in Illinoiswhich was roundly criticized by just about everyone. It didn’t seem like a serious effort, and few thought it would actually go into place. But at the time, we and others expected that this was an attempt just to set a ridiculously high number so that the “real” number would seem more “reasonable” by comparison.

The gas tax increase and EV tax are a response to falling gas tax revenues, which have ticked down very slightly as cars have gotten more efficient recently. Notably, Illinois has not raised their state gas tax since 1990 – which means their gas tax today is roughly half what it was in 1990 whenaccounting for inflation.

So despite this problem brewing for the last 29 years, Illinois decided not to act until a scapegoat came along in the form of EVs. The fossil fuel industry has been pushing across the countryfor similar fees and has been successful in getting them passed in several states. This is clearly an attempt to tamp down on EV demand and blame a tiny minority of vehicles for a problem that could have been fixed by a simple indexing of the gas tax to inflation to begin with.

Despite feeling comfortable letting gas cars get off easy for the last 29 years, Illinois has acted swiftly in response to EVs reaching 1% market share in their state only last year. Even though this tiny minority of vehicles is clearly not responsible for the last three decades of inaction, apparently the “problem” of clean vehicles needs to be solved now – at least according to the Koch brothers.

Electrek’s Take

Surely you can already guess our take from the article title and the tone of the above paragraphs. I’ve written about this before in multiple articleswhich I encourage you to read, but the gist of the argument is that these taxes are a poor way to fund roads, are unfairly high for EVs as compared to gas vehicles, do not target the actual culprits of road damage (heavy trucks), and do not represent a significant enough amount of revenue to make up for any shortfalls.

Here’s a few calculations on how ridiculous this number is. Given that a Model 3 is rated at 130mpge, if the energy going into the Model 3 were taxed at the same rate as gasoline, a Model 3 would need to drive around 34,000 miles per year to use enough gasoline to make up for a $100 tax.

Compare this to the average vehicle miles traveled per capita in Illinois, which is around 8,000, and you will see that the Model 3 is being charged much more than it should be.

All of this is on top of the taxes that EVs already pay on fuel. Electricity is taxed as well – so EVs are paying at the pump (the plug) and also in additional registration fees which gas cars do not pay.

Meanwhile, gas cars still receive a tremendous subsidy in the form of unpriced externalities, being allowed to pollute without paying the cost of cleanup. This represents a subsidy of around $700 billion yearly in the US alone.

Despite gas cars receiving this subsidy for over a century now, Illinois has seen it fit to leave the gas tax unchanged from 1990 levels (doubling it now, when inflation has doubled since 1990, means the tax is now back to what it was then).

During this attempt to slow down EV demand, Illinois remains part of the US Climate Alliance, a group of state and local governments formed in response to the announcement that the US would pull out of the Paris Agreementdespite tremendous public support for its goals. Their current governor, JB Pritzker, who also signed the EV tax bill, was responsible for Illinois joining the Climate Alliance.

It seems inefficient to commit a state to a goal of cleaning up the climate on one hand, and then disincentivize the public from doing one of the biggest things they can do to reduce their individual carbon footprint. Personal vehicles represent about 1/6th of the average American’s carbon footprint, so going EV can make a huge difference.

So here’s a proposed solution for Illinois EV drivers: since plug-in hybrids don’t have to pay this tax, go buy yourself a tiny gas RC car engine (~$100) and attach it to the axle of your car. Then tell the Illinois DMV that your car can take gasoline, therefore it’s a hybrid and doesn’t need to pay the EV tax. Perfect!

Or, if we want an actual proposed solution, stop linking gasoline taxes to road repair budgets. If we really want to talk about “paying our fair share,” then a gas tax on any personal vehicle is not the way to make up for road damage.

For all intents and purposes, shipping trucks are responsible for virtually all road damage. A fully-loaded 80,000lb semi truck does 9,600 times more damage (yes, that’s a real number) than the average 4,000lb passenger vehicle. If we’re worried about road damage, and $100 is a “reasonable” number for an EV to pay, then each semi truck should need to pay $960,000 in annual registration fees – not even accounting for mileage. If that number seems unreasonable, then $100 is also unreasonable.

What we really need is to start linking road damage to weight and miles driven, and start making polluting vehicles pay their fair share for the environmental damage they do with every mile driven.

So as long as every state is upending how they fund their transportation infrastructure for the first time in decades, let’s stop it with these stupid EV taxes and start with some reasonable policy, eh?