In Kentucky, the start of 2024 brought an unnatural, noticeable shift in how electric vehicles (EVs) are taxed compared to their gasoline counterparts. The state has imposed not one, but two distinct taxes on electric vehicles. These new taxes are each higher than the taxes levied on gasoline vehicles for comparable energy units. This move places Kentucky in a group of states that have chosen to tax EVs more heavily, arguably not reflecting the environmental benefits and reduced road damage associated with electric vehicle use.
EV Owners also now face an additional annual registration fee of $120
Firstly, EV owners in Kentucky now face an additional annual registration fee of $120, on top of the standard vehicle registration charges. This fee is more punitive towards electric vehicles, considering their efficiency and lower road wear compared to gasoline vehicles. For perspective, a hypothetical gasoline car with similar efficiency (around 140mpg) would pay approximately $30 in gas taxes for 15,000 miles a year, while an EV with 140mpge pays the flat $120 fee regardless of mileage.
Additionally, public EV charging stations in Kentucky are now subject to an extra tax of 3 cents per kilowatt hour of electricity distributed. This tax doubles for chargers located on state property. This represents a significant increase when compared to Kentucky’s average electricity rates and even more so against the state’s gasoline tax rate. As such, electricity for EVs is taxed at a much higher rate than gasoline, despite EVs causing less road damage and air pollution.
These new taxes disproportionately impact certain groups, notably apartment dwellers and commuters who rely more on public charging stations. Moreover, businesses offering free charging as an incentive might find this less feasible due to the increased costs.
The rationale behind these taxes is ostensibly to ensure that EVs contribute to road maintenance costs. However, this ignores the fact that gasoline taxes in Kentucky cover less than a third of the state’s road maintenance costs, implying that gasoline vehicles also underpay for road use. Additionally, the significant road damage caused by heavy trucks is not proportionately addressed in this taxation scheme.
While the state of Kentucky positions itself as a prime location for manufacturing electric vehicles, these new taxes seem counterintuitive. They could potentially disincentivize the adoption of EVs, which, aside from environmental benefits, could help in addressing Kentucky’s health issues related to air quality.
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