The Mileage Fee

The problem

The Highway Trust Fund was built in 1956 on a simple bargain: the people who use the roads pay for them, through a tax on the fuel they burn. The bargain has been broken for thirty years. The federal tax on gasoline has been 18.4 cents a gallon since 1993, and on diesel 24.4 cents; neither is indexed to anything. In 2025, 18.4 cents bought 55 percent less road than it did the year it was set. Cars became more efficient and then began to run on electricity, so each mile driven pays less than the last. Since 2008 Congress has transferred about $275 billion from the general fund to the trust fund to keep it solvent, including $118 billion in a single infrastructure law, which is another way of saying the road is now paid for by borrowing, by people who may never drive on it.

Meanwhile a driver of an electric car pays no federal fuel tax at all, and most states charge a flat registration fee instead, which is the same whether the car drives 2,000 miles a year or 40,000. The heaviest, most road-damaging vehicles on the highway, which are trucks, pay a fuel tax that does not scale with the damage they do. The system has stopped measuring what it was supposed to charge for.

The fix is not new. Oregon has run a mileage fee since 2015, Utah since 2020, and Virginia and Hawaii have joined them; Utah charges about 1.1 cents a mile, indexed annually, with drivers choosing between an odometer reading and a plug-in device, and a flat fee for anyone who prefers not to report miles at all. The technology is a solved problem. What has not been solved is the politics of ending a tax that everyone has stopped noticing and replacing it with one everyone will.

The proposal

The Mileage Fee: a federal road-use charge per mile driven, scaled by vehicle weight, set at the level that fully funds the Highway Trust Fund with no general-fund transfer, indexed to construction costs, and phased in over ten years as the fuel tax is phased out. Drivers report by odometer at registration by default; location-based reporting is opt-in only. General-fund transfers to the trust fund end on a fixed date. The ledger of miles, revenue and spending is published every year.

How it would work

1. The rate. Americans drive about 3.2 trillion miles a year. The trust fund's fuel taxes bring in about $45 billion. A fee of about 1.5 cents a mile for a passenger car, with higher rates by weight class, replaces the fuel tax at parity; setting the rate at the level that ends the general-fund transfers, which have averaged more than $15 billion a year, means about 2 cents a mile. The number is published, and it is the honest price of the road.

1. By weight. Road wear rises steeply with axle weight; a loaded truck does thousands of times the damage of a car. The fee scales by registered weight class, so that the vehicles that wear the road pay for it. Oregon has charged trucks by weight and mile since 1947.

1. Ten years, both ways. The fuel tax falls by a tenth each year and the mileage fee rises by a tenth, so that no driver pays both in full and no year's revenue drops. A driver of a gasoline car pays about the same at the end as at the beginning, in real terms. A driver of an electric car pays, for the first time, for the road.

1. Privacy by default. The default is an odometer reading at annual registration, reported by the state to the Treasury as states already report registrations. No device, no location, no data beyond the number on the dashboard. A driver may opt in to a plug-in device or a phone app for the convenience of paying monthly, and may opt out again. Nothing in the system records where a car has been unless the driver chooses it, and the statute forbids the government from asking.

1. The transfers end. On the tenth anniversary, the Highway Trust Fund's authority to receive general-fund transfers is repealed. Congress that wants to spend more on roads raises the fee, in the open, or spends less. The word "trust" goes back to meaning something.

1. The ledger. Every year: miles driven by class, revenue collected, revenue spent by state and by project, on one page, under № 050. The road is the largest thing the federal government builds, and the public has never seen the bill beside the use.

1. The states keep theirs. State fuel taxes are the states' business. Four have already moved to mileage; the federal fee is designed so that a state may collect its own on the same odometer reading, as Utah does, with one report and one payment.

The numbers

What the gas tax is worth. 18.4 cents in 1993 is about 8 cents in 1993 purchasing power today. A driver in 1993 paid, in real terms, more than twice what a driver pays now for the same mile.

What the transfers have cost. $275 billion since 2008, borrowed, at interest, to pay for roads the fuel tax was meant to fund. At current rates that is roughly $10 billion a year in interest alone on road spending that was never paid for by anyone who drove.

What the fee raises. At 2 cents a mile across 3.2 trillion miles, about $64 billion a year, indexed: enough to fund the trust fund's current spending with no transfers and some left over for the state of the bridges. A car driven 12,000 miles a year pays about $240, against about $100 in federal fuel tax today for a 25-mile-per-gallon car and zero for an electric one.

What collection costs. Utah's programme costs a few dollars per vehicle per year to administer through odometer reporting. At national scale, with reporting through existing state registration, collection cost is on the order of one or two percent of revenue, comparable to the fuel tax.

The honest objections

"The government will track where I drive." The strongest objection and the reason item 4 is written as it is: odometer by default, location by choice, and a statutory ban on the government asking for more. The fuel tax has been collected for a century without knowing where anyone drove, and the mileage fee, by default, knows only how far. A driver who does not trust even the odometer may pay the flat fee Utah offers, set at the miles of a heavy driver, and report nothing.

"Rural drivers drive more and will pay more." They drive more and today pay more fuel tax, in roughly the same proportion. A rural driver in a 25-mile-per-gallon truck pays about the same under the fee as under the fuel tax; a rural driver in a new efficient car pays somewhat more, because today they are paying less than the mile costs. The design's answer is the weight scaling and the ten-year phase-in, and the honest statement is that the fee measures what the road costs, and rural miles are miles.

"This is a tax increase." At parity it is a replacement, and the phase-in makes it one. Setting the rate to end the general-fund transfers is an increase, on drivers, of the amount currently being borrowed on their behalf from everyone: about $15 billion a year. The proposal says so. The alternative is to keep borrowing for roads, which is the current policy and the one the trust fund was created to end.

"Electric cars should be encouraged, not charged." They are encouraged by every other policy the country has, and they wear the road like any other car, more so for their weight. A road that charges nothing to the car of the future is a road the car of the future will not be able to drive on. The fee charges the mile, not the fuel, and that is the only basis that will still work in 2050.

"Congress will keep the fee low and keep transferring money anyway." It may keep the fee low; that is a choice made in public, with the ledger showing the shortfall. What it may not do, after the tenth year, is transfer. Item 5 repeals the authority. A Congress that wants to restore it will have to vote to borrow for roads, by name, and the ledger will show why.

Sources

• Federal Highway Administration, Highway Trust Fund and Taxes, fuel tax rates since 1993; Highway Statistics, vehicle miles travelled
• Congressional Budget Office, Testimony on Addressing the Long-Term Solvency of the Highway Trust Fund and The Status of the Highway Trust Fund: 2023 Update
• Congressional Research Service, The Highway Trust Fund's Highway Account (R48472); Peter G. Peterson Foundation, The Highway Trust Fund Explained, on general-fund transfers since 2008
• Utah Foundation, Measuring the Miles: Road Usage Charges in Utah; Utah Department of Transportation, Road Usage Charge programme rate and enrolment
• Oregon Department of Transportation, OReGO programme and the weight-mile tax, oregon.gov/odot
• Proposals № 024 (The Grid Dividend); № 045 (The Permitting Clock); № 050 (The Shareholder's Report); № 077 (The Congestion Dividend)