The Gas Tax Is Running on Empty: What the Rise of EVs Means for Road Funding—and Your Wallet

As electric vehicles (EVs) surge in popularity, a once-reliable revenue source is quietly breaking down: the gas tax. For decades, state and federal governments have used fuel taxes to fund roads, bridges, and highway projects. But EVs, which don't need gasoline, are sidestepping this traditional funding model entirely. For business owners, high-net-worth individuals, and investors in the DMV region, this shift carries practical implications—from infrastructure impact to emerging fees, taxes, and regulatory reforms designed to fill the revenue gap.

Here's what you need to know.

Key Takeaways

• The gas tax, long a primary source of road project funding, is losing effectiveness as electric vehicle usage rises.

• Federal and state fuel tax revenues have declined in real terms for decades, creating a widening infrastructure funding gap.

• States may introduce new taxes or fees—such as per-mile charges or EV surcharges—to recoup infrastructure costs.

• These changes could impact individual taxpayers, LLCs with fleet vehicles, and estate plans involving vehicle assets.

• Businesses should anticipate shifting tax structures that affect logistics, tax planning, and long-term compliance strategies.

Why This Matters for Businesses and High-Net-Worth Individuals in the DMV

If you live or run a business anywhere in the Washington, D.C., Maryland, or Virginia region, you've noticed the growing number of Teslas and other EVs on the road. That's good news for the environment and a promising sign for innovation. But behind the scenes, lawmakers are grappling with a serious fiscal problem: gas tax revenue is drying up.

Gas taxes were designed to tax road use by taxing fuel consumption. EVs use the roads—but not the fuel. Without an update to this model, the revenue available to fund road construction and maintenance will continue to fall short.

This matters to more than just government budget offices. If your business owns company vehicles, relies on transportation infrastructure, or is involved in estate planning that includes real properties or cars, these tax shifts could impact your bottom line.

The Problem: Declining Revenue from an Outdated Tax Model

The federal gas tax hasn't been raised since 1993, and many states—Maryland and Virginia included—also rely on outdated tax schemes. When inflation and rising construction costs are factored in, the "real" value of those tax dollars has steadily eroded.

At the same time, electric and hybrid vehicles claim more of the market. According to industry projections, EVs could make up over 40% of new vehicle sales by 2030.

So while road maintenance costs rise, the revenue collected to fund those roads is trending down. This growing imbalance leaves lawmakers with limited options: raise fuel taxes (politically unpopular), cut infrastructure investment (economically harmful), or implement alternative taxation strategies.

Here in the DMV, we're already starting to see a combination of all three.

What States Are Doing to Close the Gap

To offset losses in fuel tax revenue, states are exploring new vehicles—figuratively and literally—for collecting transportation taxes.

Some approaches include:

• Flat EV Registration Fees: Maryland and Virginia have imposed annual fees for electric vehicles. Maryland's is currently $100 to $125, while Virginia's is around $132.

• Mileage-Based User Fees (MBUFs): Some states are testing per-mile charges instead of gas taxes. Under this model, drivers pay taxes based on how far they drive each year.

• Tolls and Congestion Pricing: Urban areas, including D.C., may resort to more localized tolling and congestion fee systems to address the shortfall.

These programs come with significant administrative, privacy, and technology hurdles—but many legislatures see them as inevitable alternatives.

Who Pays the Price? Impact on Individuals and Business Owners

For DMV residents and businesses, the implications of these shifts are far from abstract.

Let's look at a few concrete examples:

• Individual Taxpayers: Your total cost of vehicle ownership could go up. If you drive an EV, you may owe more in annual fees. If states move toward mileage tracking, drivers could need to install tracking systems that report miles driven.

• LLCs and S-Corps with Fleet Vehicles: Companies with fleet operations in Maryland or Virginia may soon face additional taxes based not on fuel used, but on vehicle miles traveled. This could especially affect logistics, delivery, and construction businesses.

• Commercial Real Estate Owners: Investors in commercial properties may face indirect exposure to these changes through increases in tolls or additional costs to tenants reliant on heavy road use.

• Estate Planning Considerations: Families holding valuable vehicle assets—think collectible cars, high-end EVs, or commercial fleets—should reassess how these assets are titled and taxed in estate transfers. Rising regulatory costs could affect the valuation or disposition of these assets over time.

A Legal and Strategic Perspective: How to Stay Ahead

For business owners and professionals navigating this evolving space, proactive tax planning and legal guidance are essential.

Here's how Thienel Law recommends preparing for these shifts:

1. Review Vehicle Asset Structures
   If your business owns cars, vans, or trucks—especially EVs—review how these assets are titled. Moving vehicle ownership into appropriate legal structures (like a holding LLC) can provide flexibility and liability protection.

2. Track Regulatory Trends by State
   Maryland, Virginia, and D.C. all have different approaches to EV fees and tolling systems. If you operate across state lines or have property in multiple jurisdictions, consider a compliance audit of state-specific vehicle tax requirements.

3. Factor Infrastructure Costs into Business Projections
   Logistics-based businesses should begin forecasting future tax and fee increases tied to road use. This includes EV fees, congestion pricing, and possible federal mileage charges under current pilot proposals.

4. Keep Road Funding in Mind During Estate Planning
   For families with significant vehicle portfolios—or commercial fleets as part of business succession—include these emerging fees in your long-term planning. Tax burdens could affect both valuation and liquidation timing.

5. Revisit Corporate Tax and Depreciation Strategy for EVs
   The IRS allows certain EV tax credits and depreciation schedules to lessen the upfront cost of EV investing. But as fee structures change, your tax position could also shift. Businesses should coordinate with a tax attorney who understands how these evolving rules interact with broader fleet or asset strategies.

Unique Insight: Infrastructure Funding Will Affect More Than Just Drivers

A common misconception is that these changes impact only drivers of EVs or hybrid vehicles. In reality, the downstream effects extend across the broader economy.

Developers, construction firms, last-mile delivery services, tech companies with vehicle-based services (such as mobile health clinics or rideshare platforms)—all may feel the impact. Higher tolls or mileage fees can lead to cost cuts elsewhere in the business. For real estate owners, lower infrastructure investment could lessen property values in high-growth corridors—or complicate zoning and permitting processes.

Think of road tax reform not as an isolated issue, but as a systemic one—entwined with commodity pricing, land use decisions, transportation accessibility, labor rates, and compliance costs.

A Time of Transition—and Opportunity

While this shift in transportation funding presents challenges, it also opens opportunities. Businesses and estate holders who adapt strategically can position themselves ahead of the curve—while those who ignore these trends may face steep, unexpected costs down the road.

Governments will continue experimenting with new revenue mechanisms. Federal proposals for nationwide vehicle-miles-traveled (VMT) systems are gaining traction, and private toll operators are expanding in metro regions like Northern Virginia.

Even if you're not directly affected today, the policy landscape is evolving fast.

Is Your Business or Estate Plan Ready for the New Road Tax Era?

The end of the gas tax as we know it is more than a policy story—it's a financial turning point for businesses and individuals alike. Whether you're managing a fleet, updating your estate plan, or preparing to invest in EV-friendly assets, the time to understand these changes is now.

At Thienel Law, we help clients anticipate and navigate shifting tax laws with clear, practical strategies rooted in deep experience.

If you're unsure how these developments apply to your business or personal situation, we're here to help. Schedule a consultation with Steve Thienel to get advice tailored to your goals.