Electric cars are no longer tax-free. In the UK, every EV pays Vehicle Excise Duty (VED) — a flat £200 a year in most cases, with an extra £410–£440 annual “expensive car supplement” if the car’s original list price was above £40,000 (rising to a £50,000 threshold from April 2026). In the US, there’s no federal EV road tax yet, but 41 states already charge their own annual EV registration fee, ranging from roughly $50 to over $250. Below, we break down exactly what you’ll pay depending on where you live, when your EV was first registered, and how it compares to a petrol or diesel equivalent — plus a full rate table you can check your own car against.
Quick Summary Box
| Takeaway | Detail |
|---|---|
| 🇬🇧 UK EVs pay VED | Since April 2025, electric cars no longer qualify for the £0 exemption |
| Standard UK rate | £200/year for most EVs first registered after April 2017 |
| Luxury car supplement | Extra £410–£440/year for EVs priced above £40k (£50k from April 2026) for years 2–6 |
| 🇺🇸 US has no federal EV tax — yet | A proposed $130/year federal fee (BUILD America Act) is pending, not law |
| US state fees vary widely | From $0 in some states to $267/year in Michigan |
Why EVs Are Being Taxed Now
For years, zero road tax was one of the clearest financial perks of buying electric. <cite index=”5-1″>That changed on 1 April 2025, when electric vehicles started paying VED for the first time in the UK.</cite> The logic driving this shift is the same on both sides of the Atlantic: EV owners don’t pay fuel duty or gas tax, and that revenue historically funded road maintenance. As EV adoption grows, governments are closing that gap with direct registration or excise charges instead.
UK Electric Car Road Tax (VED): The Full Breakdown
How much VED you pay depends on two things — when your EV was first registered, and its original list price when new.
Registered April 2017 – March 2025: <cite index=”3-1″>These EVs now pay the standard annual VED rate, currently £200 a year as of April 2026.</cite>
Registered on or after April 2026: <cite index=”3-1″>New EVs pay a £10 first-year rate, then move to the £200 standard rate from year two onward.</cite>
Older EVs (registered March 2001 – March 2017): <cite index=”3-1″>These fall under legacy rules and pay a reduced rate of £20 a year.</cite>
The “Expensive Car Supplement”: This is the part that catches new EV buyers off guard. <cite index=”3-1″>If your EV had a list price above £50,000 when new, an additional supplement of roughly £440 a year applies from years 2 through 6</cite>, on top of the standard rate. <cite index=”4-1″>This threshold is rising from £40,000 to £50,000 from 1 April 2026, meaning some EVs will no longer be caught by the supplement.</cite> Crucially, <cite index=”9-1″>the supplement is based on the vehicle’s original list price when first registered, not its resale value — a £60,000 EV sold second-hand for a fraction of that price still pays the supplement.</cite>
Note: VED thresholds and rates are set by HM Treasury and are revised most tax years. Always confirm current rates at gov.uk before budgeting.
Does Buying Electric Still Save You Money on Tax?
Yes — just not as much as before. <cite index=”9-1″>The maximum road tax saving versus a petrol equivalent is around £190 a year for a standard-rate EV, or about £545 a year for an EV priced above £40,000 during years 1–5, once first-year rate differences are factored in.</cite> Compare that to a high-emissions petrol or diesel model: <cite index=”1-1″>vehicles producing over 255g/km of CO2 can pay £5,690 in first-year road tax alone, versus roughly £560 for an average petrol car.</cite> EVs remain firmly on the cheaper end of that scale, even post-2025.
Company Car Drivers: The BIK Change
If your EV is a company car, there’s a separate cost to track. <cite index=”1-1″>From 6 April 2026, the Benefit-in-Kind (BIK) rate for fully electric company cars rises from 3% to 4% for the 2026/27 tax year.</cite> It’s still dramatically lower than the 20%+ BIK rates applied to most petrol company cars, so electric remains the more tax-efficient company car choice by a wide margin.
United States: No Federal EV Road Tax — But Watch This Space
Unlike the UK, the US has no nationwide EV road tax today. <cite index=”12-1″>However, the House Committee on Transportation and Infrastructure has proposed an annual $130 federal registration fee for electric vehicles, rising by $5 every two years from 2029 toward a $150 cap, alongside a $35 fee for plug-in hybrids capped at $50.</cite> This is a proposal, not enacted law — treat it as a “watch” item rather than a confirmed cost.
What’s already in effect is a patchwork of state-level fees. <cite index=”15-1″>Most states now charge EV registration surcharges ranging from roughly $50 to $225 annually to make up for lost gas tax revenue.</cite> <cite index=”17-1″>As of the 2026 data, 41 states charge an additional EV registration fee, 9 states currently have none, and the median battery-EV fee sits around $150 a year — about $12.50 a month.</cite>
Michigan currently tops the list. <cite index=”13-1″>The state raised its EV fee from $160 to $267 a year, and its plug-in hybrid fee from $60 to $113, with heavier vehicles paying up to $367 and $183 respectively.</cite> Some states also charge unusual upfront structures — <cite index=”17-1″>New Jersey can trigger four years of EV fees at initial registration, and Texas assesses a $400 charge for new EV registrations covering two years, versus $200 at renewal.</cite>
The Bigger Trend: Weight-Based and Mileage-Based Fees
<cite index=”11-1″>The clearest trend for 2026 is a shift away from flat EV fees toward weight-based or mileage-indexed formulas, on the reasoning that heavier EVs cause more road wear.</cite> <cite index=”14-1″>Some states already let EV owners opt into a pay-per-mile system instead of a flat annual fee — for example, one state sets its mileage-based charge at $0.0111 per mile driven as an alternative.</cite> Expect more states to adopt this model as EV market share grows and flat fees become harder to justify politically.
Comparison Table: EV Road Tax / Registration Fees by Region (2026)
| Region | Standard Annual EV Charge | Luxury / High-Value Surcharge | Notes |
|---|---|---|---|
| UK (registered 2017–2025) | £200/year (VED) | +£410–£440/year if list price >£40k (>£50k from Apr 2026) | Supplement applies years 2–6 only |
| UK (new registrations, Apr 2026+) | £10 year 1, then £200/year | Same supplement rules apply | Lowest first-year rate of any fuel type |
| US — Michigan | $267/year | Up to $367/year for heavier EVs | Highest state EV fee in the US |
| US — Colorado | $26/year (2026–27), rising annually | N/A | One of the lowest, but scheduled to increase yearly |
| US — Texas | $200/year at renewal | $400 upfront for new 2-year registration | Prepayment model |
| US — Tennessee | $200/year (2024–2026) | Rises to $274/year from 2027 | Indexed for inflation from 2027 |
| US federal (proposed) | $130/year (not yet law) | N/A | Pending BUILD America Act; may rise to $150 cap by 2029+ |
| US median (all states) | ~$150/year | Varies by state | 41 of 50 states currently charge a fee |
Figures reflect publicly available rates as of mid-2026. Local rules change frequently — always confirm with your national or state transport authority before budgeting.
Bottom Line
Electric cars are no longer tax-free, but they’re still the cheaper option at the pump and, in most cases, at the tax office too. In the UK, expect a flat £200 a year unless your EV cost more than £40k–£50k new, in which case budget for an extra £400+ annually through year six. In the US, your fee depends entirely on your state — anywhere from $0 to over $250 a year — with a federal EV fee still just a proposal, not a cost you owe today. Either way, the tax gap between EVs and combustion cars has narrowed, but it hasn’t closed: electric still wins on total running cost.
