2 nov 21

US legislation, tax drivers on fuel usage or miles traveled?

As the US awaits voting on a $1.2 trillion infrastructure bill proposed by President Joe Biden, one factor that will impact the management of corporate fleet is a possible transition from taxing drivers based on gasoline usage to taxing them based on miles traveled.

The bill, which falls under the $1.85 trillion scaled-down version of the “Build Back Better” legislation proposed by the president, includes $7.5 billion for electric vehicle (EV) charging stations, $7.5 billion for electric school buses, and increased credits for EVs. "Under the Build Back Better plan, we aim to cut US greenhouse gas emissions by well over a gigaton by 2030," President Biden said at the COP26 Climate Conference in Glasglow on Monday (1 Nov).

President Joe Biden COP26 in Glassglow (source: CNBC)

Although taxing drivers based on miles traveled could be implemented in the future, there is no new vehicle tax of such sort in the infrastructure bill, according to a report in USA today who quoted Joshua Sewell, senior policy analyst for federal budget watchdog group Taxpayers for Common Sense.

“What the legislation does include is a voluntary pilot program to study the viability of a per-mile user fee,” said Mr Sewell, explaining that it will be used to improve and maintain roads and highways under the country’s Highway Trust Fund.

If passed, pilot participants would record miles driven and then pay fees based on those miles. Enrollment would be voluntary, and participants would be reimbursed for any charges they pay. The pilot would run from fiscal year 2022-2026. 

Today (2021), the Highway Trust Fund gets most of its revenue from taxes on gas and diesel. However, with the growing usage of full electric vehicles (EV) and plug-in hybrids (PHEV), revenues are diminishing and a transition to miles-driven or a combined electric usage tax looks eminent. Besides the federal pilot program, several states are already exploring road usage charges. 

As for new car sales in the US, sales of new EVs and PHEVs are forecasted to represent less than 4% in 2021, according to automotive market intelligence service LMC Automotive. However, electrified vehicle sales should jump to 34.2% of the market by 2030, according to LMC, with 30.1% seen being full-electric and 4.1% PHEVs.

source (LMC Automotive)

Although there are some social media posts claiming charges of 8 cents per mile under the proposed infrastructure plan, the USA Today report found these claims to be inaccurate and highway usage charges of less than 2 cents per mile – according to some sources - could actually be enough to cover highway funding needs. 

VP of federal tax and economic policy at the Tax Foundation, Will McBride, has stated that a user fee is not a bad idea. The question in most minds, however, is how much of a fee should be applied.


On Thursday (28 Oct), House Democratic leaders were once again forced to push back the timeline for a vote on the infrastructure bill. 

This is the second time in two months that House leadership has had to delay the infrastructure vote after a similar scenario took place at the end of September. For now, it's unclear how long the vote on the bipartisan infrastructure bill will be delayed.

In Global Fleet Survey 2021, you will find several charts allowing you to benchmark your strategy with your peers accross North America and more. Download the full results here.

Authored by: Daniel Bland