Minnesota electric vehicle owners will start the new year with a heftier annual tab, as the state’s EV registration surcharge doubles to a minimum of $150 and plug-in hybrids get hit with a new $75 fee.
Lawmakers painted the change as a bipartisan solution to sagging gas tax receipts used to maintain roads and bridges, according to local reporting from KARE 11.
What’s Changing for Minnesota EV Owners Under New Fees
The state’s EV-specific registration fee increases from $75 to at least $150 for battery-electric vehicles. Drivers with plug-in hybrid vehicles, who were previously exempt, will see a $75 line item. The state is also tying the EV fee structure to how it computes registration costs more generally: newer, pricier vehicles will pay more. For instance, a new $50,000 electric vehicle would receive an EV-related charge of approximately $250 under the modified formula, according to CBS News Minnesota.
This EV surcharge is in addition to Minnesota’s current vehicle value and age-based registration tax, and regular plate fees. In practice, the total at renewal will be determined by how much the car costs as new, its depreciation and whether it is fully electric or a plug-in hybrid.
Why Minnesota Is Increasing EV Registration Fees Now
Gas taxes have underpinned state highway funds for decades, but more fuel-efficient engines and the increasing popularity of plug-in vehicles have eaten away at that revenue. EVs share the same roads as everyone else, without purchasing gasoline — a reality that has prompted many states to adopt EV-specific fees.
Minnesota is now part of a national wave. Both the Tax Foundation and the National Conference of State Legislatures estimate that there are roughly 40 states with such fees, most between about $50 and $200. These fees are typically justified by policymakers as a way to maintain “user pays” principles. Some lawmakers also contend that heavier battery packs can lead to more pavement wear, although transportation researchers say for all powertrains — including big pickups and SUVs — damage scales steeply with total vehicle weight and the load on an axle.
Pushback from EV Advocates on Fairness and Adoption
EV supporters say the framework goes too far. Drive Electric Minnesota described the change as punitive and cautioned that it could stifle adoption at a time when the market for electric cars in the state is picking up. The group cites public figures that suggest the state has tens of thousands of plug-ins on Minnesota roads — by some accounts, nearly 80,000 — but they still account for a small fraction of all registrations.
Opponents also argue that a flat or semi-flat annual fee is unfair compared to using an actual usage model. A low-mileage commuter of a compact EV may be charged as much as a high-mileage driver of a larger model even though the two have significantly different road use.
A Shift Toward Pay-Per-Use Models for Road Funding
Minnesota is getting ready to add a separate electricity tax for public fast charging in addition to the annual surcharge in the following years, an effort to make payments more closely follow road use. The wrinkle: The vast majority of charging occurs at home. Statistics widely quoted by the U.S. Department of Energy indicate 80 to 90 percent of electric vehicle charging is done off the public network, likely limiting how much revenue can be realistically raised from a public-charging tax and perhaps dampening long-distance EV travel if it’s priced aggressively.
Other states are experimenting with road-usage charges that charge drivers by the mile, regardless of how they’re fueled. Programs in Oregon and Utah provide a template that Minnesota officials are monitoring, according to transportation policy briefings. A per-mile model might help address questions about equity across types of drivers, but it would also need strong privacy protections and new billing systems in place — and broad buy-in from the public.
What Minnesota Drivers Should Expect at Renewal Time
Own a plug-in vehicle in Minnesota? Budget for a higher renewal. A new mid-priced battery-electric model would fall into an EV-specific payment of about $250, while many owners of older or lower-value EVs will pay the $150 minimum. Plug-in hybrid drivers would need to budget for the new $75 fee, plus the regular registration taxes.
Shoppers also can collect incentives to ease the pain. Minnesota’s state rebate program — run by the Department of Commerce — provides up-front savings for eligible new and used electric vehicles, and utility rebates as well as lower-cost off-peak charging rates can pare down ongoing costs. Total cost of ownership still tends to favor EVs because of lower fueling and maintenance costs, but these new fees bring that gap closer for certain drivers, namely those who drive fewer miles annually.
The policy question remains unresolved: Should EV owners pay into the system through stiffer annual fees, per-mile charges, electricity taxes at public fueling stations or some mix of all three? Minnesota’s shift is a marker that the way we pay for roads is changing. How it balances fairness, climate ambitions and infrastructure needs will be gauged in bills that will arrive in drivers’ mailboxes — and in the pace of electric vehicle adoption that the state experiences from here.