Wisconsin Electric Vehicle Tax

by Ben N on October 7, 2018

While I knew it was coming, I still wasn’t happy to see it arrive… A $100 additional tax I’d have to pay for driving an electric car.
But where did this new tax come from, and does it really help the State of Wisconsin Budget?

This last year, the State of Wisconsin was in trouble.The Legislature still had not passed the biennial budget. More than two months overdue, it eventually passed and went on to the Senate for approval of the $76 Billion budget. The delay was largely due to disagreements among Republicans over road funding.

BORROWING is a huge part of the funding mechanism for the transportation budget. Level-headed Republicans did not want to take on any additional debt without some other new source of revenue.

Tax vs User Fee

Over the previous year, there had been much discussion on the possibility of raising the state’s gas tax. Unfortunately, for the Republican-lead state government, TAX is a dirty word. Even adding tolls was considered, as that would be a “user-fee”, rather than a “tax”. Eventually, as part of this discussion, electric vehicles were highlighted as being part of the problem. Legislators proposed that electric vehicles do not pay gas tax and therefore should be subject to some other fee to “pay their fair share.”

(Republican Governor Scott Walker has been so for “user fees” that he has completely eliminated revenue used to fund the state park system, essentially transforming state parks into private parks. (https://doorcountypulse.com/can-self-sustaining-funding-model-work-for-wisconsin-state-parks/)

Originally, the proposal included a surcharge of $100 for Electric Vehicles and  $75 for Hybrid Vehicles*. This was intended to bring in $8 Million in revenue. While that’s a drop in the bucket compared to the total transportation budget, it was a “NEW” source of revenue and thus allowed Republican Legislators to come to a political agreement and then borrow $402 Million for transportation. (Placing tax-payers further in debt.)

The final legislation did NOT include the fee for Hybrids, only Electrics. According to the State Department of Transportation, only 1,982 of Wisconsin’s over 6 Million registered vehicles are electric. Electric vehicles represent a fraction of a percent of registered vehicles in Wisconsin. At an additional $100 fee per year, that raises a total of only $198,200!
For comparison, “the expansion of Interstate 39/90 south of Madison to the Illinois border is projected to cost roughly $1.6 billion.”

The new Electric Vehicle Tax will raise less than $200,000 for state government per year. This fee wasn’t about adding money to the state coffers, it was about saving political face.

Other Funding Mechanisms

Were there other ways that the State could have raised more than $200,000 other than by targeting Wisconsin drivers of specific vehicle technology? There certainly was, not limited to the re-examining the gas tax, allowing new electric vehicle sales, or even by enforcing current state statutes.

Gas Tax Indexing

Wisconsin originally set a 16 cent per gallon tax in 1985. However, it was INDEXED to follow inflation. That way, even as everything else went up (and as workers pay went up,) the gas tax would simply rise with the economy. However, a “bipartisan coalition repealed the law in 2005, and… raised the gas tax to 30.9 cents per gallon, which is where it sits today.”

Because of that, the gas tax hasn’t been raised in 12 years.
According to the nonpartisan state Legislative Fiscal Bureau, the loss of gas tax indexing means the state has lost out on $1.2 Billion in revenue.

Electric Vehicle Sales

Wisconsin also does NOT allow Tesla to sell their electric vehicles in the state. Buyers need to travel to Illinois or Minnesota and purchase their cars there. Clean Technica finds the average price of a new Tesla Model 3 to be $59,300. Because sales tax of a vehicle is paid in the state it is used at the original registration, Wisconsin has little reason to allow Tesla sales in the state, as there would be no additional tax revenue, but there would be risk of offending the Automotive Dealership Lobby.

Republicans and Democrats agreed that sales of Teslas in Wisconsin was good for the state and proposed a bill to allow in. Unfortunately, the bill was never passed.

Tesla has over 450,000 reservations for the Model 3. If those were all at the current average sale price and divided evenly between each of the 50 States, it would mean over 500 Million in sales per state.
Imagine if Wisconsin keep that $500 Million IN STATE, instead of forcing it to leave! When GM was going through bankruptcy and government support, politicians constantly mentioned the “Ripple Effect”. Large companies produce commerce not only through their own products, but also through the companies, products, and employees supported by that entire industry. $500 Million in sales IN STATE could have an amazing positive effect on the economy.
Having local sales of Teslas also increases the likelihood of a purchase with approximately $3,000 in sales tax going to the state for each vehicle sold.

Enforce Existing Alternative Fuel Taxation

Lastly, Wisconsin already had mechanisms in place for taxing alternative fuels. In some cases, such as vegetable oil use, alternative fuels even had a tax exemption. While electricity wasn’t specifically listed as an alternative fuel in existing statutes, new legislation {Section 1895M.341.25(1)(L) Paragraph A,} specifically listed electricity as NOT an alternative fuel.
If electricity was considered an alternative fuel and taxed accordingly, it would be taxed at a rate of $.0088 per Kilowatt-Hour. Many electric cars can average four miles on one kilowatt-hour of electricity, so the tax would be about$0.0022 per mile. An electric car traveling 15,000 miles per year, taxed on parity with other alternative fueled vehicles would be taxed $32.86.
That cost would certainly save EV drivers, while still having them pay their fair share. Should a driver drive less efficiently, or drive further than average, the number could easily be HIGHER than the EV Tax, earning the state additional revenue.

Vehicles could also be taxed based on mileage, regardless of fuel type.

Electric Vehicles as Minority

Unfortunately, Electric Vehicles have poor representation. With fewer than 2,000 in the State of Wisconsin, it’s easy to view them as an “other”. Beyond that, Teslas are some of the most conspicuous electric vehicles on the road. Since they have traditionally been in the luxury car class (and price!) it’s easy for the average voter to think of electric car drivers as being RICH. “How dare those rich guys drive their fancy cars and NOT pay the gas tax!”
Hopefully, as electric vehicles become both more common and less expensive, this impression will change.

Unfortunately, the situation does mean that a person who responsibly purchased a cost-effective used electric car to be both environmentally and economically sensible is stuck paying an extra $100 tax.

In the many conversations we have with electric vehicle drivers, we have NEVER MET EVEN ONE opposed to paying for road use. They ARE generally opposed to be singled-out, paying too much, or paying a flat fee which has no correlation to either the gas tax or number of miles traveled.
Until electric vehicle drivers get more representation (most likely by there being a GREATLY increased number of EVs on the road,) EV drivers will have to put up with unnecessary additional taxes due to politicians using the matter as a political football and  scape-goat.

So, due to bad politics, the state of Wisconsin will collect less than $200,000 per year from a very small targeted group, instead of:

  • $1.2 Billion over 12 years from gas tax indexing
  • The Ripple Effect of $500 Million in Tesla sales (based on averaged current sales reservations)
  • An unknown amount based simply on using standards we already had in place for Alternative Fuels

Additional fees on electric vehicles discourage their use.
EVs are far cleaner than gas cars, can run on renewable energy (energy Made in America!) and support the US economy, especially with innovative US companies like Tesla.

If you live in a state or area proposing additional fees on electric vehicles, PLEASE contact your representatives. Show them your car. Take them for a ride. Explain how wonderful they are, and are GOOD for not just for the ecology, but for our ECONOMY!

We need our representatives to support us to create a clean transportation future.

Until then, stay charged up!


* The fee for Plug-In Hybrids is still not clear. The state DOT tracks registrations of both electric vehicles AND hybrid vehicles, but does NOT differentiate between Plug-in and typical Hybrids. The current Wisconsin Title Application form (MV1) has a “Miscellaneous Fee” for “Electric Vehicle Surcharge”, but no mention of Hybrids or Plug-in Hybrids. In casual conversation with acquaintances who drive Chevy Volt plug-in hybrids, none have had to pay an additional fee.
The actual legislation calls for a $75 fee for hybrids which have no less than a 4kWH battery pack and can charge from an external electrical source. However, the implementation of the fee does not appear to have made it onto DOT paperwork. Rumor has it that the DOT requires a large software update of millions of dollars to be able to properly track and tax plug-in hybrids.

UPDATE 11/28/2021 – The “EV TAX” does now include hybrids. A vehicle such as a 2012 Chevy Volt – which can be driven completely on gasoline – is required to pay an additional $75 per year when renewing the vehicle registration.

{ 5 comments… read them below or add one }

1 Joe Siudzinski October 20, 2018 at 9:32 pm

… and how much does implementation of this tax cost? Software changes, form changes, etc. Grrr…

2 admin October 21, 2018 at 7:45 am

The rumor is that the DMV can NOT at this point collect the fee for plug-in hybrids. It will need a multi-million dollar software upgrade to be able to do so.

3 Ryan November 2, 2018 at 4:08 pm
4 admin November 4, 2018 at 9:43 am

Thanks for the update!

5 Cal November 8, 2018 at 8:42 am

Hi Ben,

Have you calculated what the average cost is annually for an ICE, versus the cost to an EV owner?

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