Comparing proposals to fund Highway Trust Fund through registration fees instead of taxes

By Gary Williams, SSGA Director of Transportation & Regulatory Affairs 

The Highway Trust Fund (HTF) faces a persistent solvency crisis, with spending far exceeding traditional revenue sources such as gasoline and diesel taxes. As fuel efficiency improves and electric vehicle (EV) adoption grows, these revenues fail to keep pace with infrastructure needs. The Congressional Budget Office warns of a $40 billion annual shortfall by 2029 – growing to $46 billion by 2032 – if current funding structures remain unchanged. 

Lawmakers and policy groups have been floating multiple reforms to replace or supplement the fuel tax system, shifting toward direct registration-based fees. These proposals aim to restore the “user-pays” principle while ensuring sustainable revenue in a changing transportation landscape. 

1. Federal EV and hybrid registration fees

One proposal debated in Congress in 2025 would add annual federal registration fees collected through state DMVs: 

• $250 per year for electric vehicles 

• $100 per year for hybrids 

• Possible low flat fee for ICE vehicles (proposed but removed before final vote) 

These fees would be temporary (set to sunset in the mid-2030s) and would be remitted to the HTF’s Highway Account. States would be offered incentives and face penalties for nonparticipation to ensure nationwide adoption. Supporters argue this restores fairness, while critics say EV owners would be overcharged compared to their fuel-tax-paying counterparts. 

2. Infrastructure access fee based on vehicle weight

(Highway Users Proposal) 

Another, more sweeping reform comes from the Highway Users coalition, which proposes eliminating all current federal fuel taxes and truck-related taxes and replacing them with a federal “Infrastructure Access Fee” on all vehicles, based on their weight class. 

How it works: 

• Collected through existing state vehicle registration systems, minimizing administrative overhead. 

• Applies to all vehicles regardless of fuel type – ensuring EVs and future alternative-fuel vehicles contribute proportionally to road wear. 

• Estimated revenue: about $70 billion annually. 

Eliminates: 

• Federal gasoline/diesel excise taxes 

• 12% Federal Excise Tax on new trucks and trailers 

• Other HTF-specific excise taxes 

Benefits: 

• Technologically neutral; no data tracking needed. 

• Could reduce fuel prices by removing pump taxes. 

• Predictable revenue base tied to vehicle fleet growth. 

• Reduces compliance complexity for industry. 

• States keep the first $100 million they collect annually as an incentive. 

Transition process highlights: 

• Federal funds to help states adapt systems and audit vehicle weights. 

• Nationwide public awareness campaign before rollout. 

• Pro-rated fees for transition period. 

• Compliance ensured via fines and registration checks. 

Side-by-Side Comparison of Proposals 

The Highway Trust Fund’s future depends on shifting away from declining fossil fuel tax revenues toward more sustainable funding models. Federal EV and hybrid fees offer a targeted short-term supplement, while the Infrastructure Access Fee represents a full structural overhaul. As Congress prepares for post-2026 transportation reauthorization, these two proposals, alone or combined, could shape the next era of U.S. infrastructure financing.