Senate recently passed President Joe Biden’s infrastructure bill, which includes a pilot program for vehicle mileage tax. This tax would charge drivers based on how many miles they drive in a year. The vehicle mileage fee will likely bring in revenue for transportation and future infrastructure projects.
Why is vehicle mileage tax is being enforced?
The goal of the mileage tax is to “test the feasibility of a road usage fee,” according to the infrastructure package. The bill goes on to say, “to conduct public education and outreach to increase public awareness regarding the need for user-based alternative revenue mechanisms for surface transportation programs.” In short, the tax will be used to raise money and perform outreach regarding transportation options.
When are you expected to pay vehicle mileage tax?
This tax may or may not be implemented, so you don’t have to worry just yet. During a pilot program, volunteers from all 50 states will test out the taxing system by reporting their miles. Driver and passenger miles will be tracked through data apps and GPS. This pilot program could take a while to be completed before a final decision is made.
Will a vehicle mileage tax replace gas tax?
It is uncertain now as to whether President Biden will implement mileage tax in addition to, or in place of gas tax.
Advantages and disadvantages
While drivers could be taxed based on how much they drive, rather than paying more for gas, the drivers may be concerned with privacy. Sharing your GPS data with the government can raise some red flags for some Americans, as well as prove to be a difficult feat to accomplish. There is also the possibility of rural drivers paying more because they drive further than urban and suburban drivers.
As additional information is gathered on the infrastructure bill, we will share with our readers and clients. For now, it seems that there is a lot of uncertainty around whether vehicle mileage taxes will be taken into action in the near future.
For tax relief services and questions, call Optima at 800-536-0734 for a no-obligation consultation today.