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4 East Coast states to test mileage tax

July 1, 2016

If you're reading this, thank you. You could be one of the 43 million Americans who've already headed out this long Independence Day holiday. I appreciate you delaying your trip, or at least checking this post, fittingly, on your mobile device.

Giphy near wreck passingMore states are exploring mileage taxes to replace gas taxes. Maybe they should look at taxing dangerous drivers like this guy!

AAA's travel prediction this year represents the biggest July 4th travel volume on record and includes 5 million more travelers than we saw during the Memorial Day break, generally seen as the unofficial start of the summer vacation season.

The figure might be helped by the fact that the Fourth of July this year is on a Monday, giving most workers a long weekend. Also, AAA's travel calculations cover trips taken from Thursday, June 30 to Monday, July 4.

Inviting pump prices: Still-low gasoline prices, the cheapest on this holiday since 2005, also are encouraging drivers to venture out and little further.

The low fuel costs help offset the gas excise taxes, charged by the United States and many of the states. Four heavily trafficked eastern states, however, think it might be time to re-do how they collect money from drivers.

I-95 Corridor Coalition, which represents transportation agencies, toll authorities, and related organizations, has applied for a federal grant that would let several northeastern states test methods that could replace a gas tax.

One of those alternatives is charging drivers a fee based on how many miles they drive.

Increased interest in mileage taxes: Under the grant, Delaware, Pennsylvania, Connecticut and New Hampshire will implement pilot programs to test a mileage tax. Vermont also has signed on for the planning portion of the project, but financial constraints mean it will not conduct its own pilot.

On the other side of the country, Nevada and Oregon have already run their own mileage tax tests. California will begin testing it this month.

Mileage taxes in lieu of fuel taxes started getting more attention when hybrid and electric autos started making inroads into the consumer auto market. Since those vehicles don't use any or as much traditional fossil fuel, the drivers don't pay the excise taxes. But they still use the roads and other infrastructure that the fuel taxes fund.

"The idea is to get folks comfortable that mileage-based user fees are a feasible, reasonable and easy-to-use approach," Patricia G. Hendren, executive director of the I-95 Coalition, told The Washington Post.

Gas taxes still preferred: Logic and feasibility, however, don't sway a lot of drivers.

A June 2016 survey by the Mineta Transportation Institute found that support for a 1-cent per mile tax was only 23 percent, down a percentage point from just a year ago. Support went up, however, to 48 percent, four point higher than in 2015, when that same mileage tax amount was based on based on cars' pollution emissions.

Of course, most drivers and politicians also are averse to raising fuel taxes. Although some states have taken steps to hike their gas taxes, lawmakers in Washington, D.C., haven't touched the federal 18.4 cents-per-gallon gas tax since 1993.

But something's got to give or our already crumbling roads and bridges definitely will.

That, however, is something to think about once you return from your July 4th holiday. Wherever you go and however you get there, here's to safe and easy travel. 

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It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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