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 Kozi Checks & Balances TaxTactics News 
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March 04.2025
2 Minutes Read

EVs and the Highway Trust Fund: Key Insights and Future Solutions

Traffic on highway related to Highway Trust Fund and Electric Vehicles.

Understanding the Highway Trust Fund's Challenges

The Highway Trust Fund (HTF) faces significant fiscal challenges as highway expenditures now surpass its primary revenue sources. With expenditures projected to reach a staggering $270 billion in deficits from 2025 to 2034, it’s clear that traditional funding mechanisms, notably the gas tax, are in dire need of reevaluation. This is largely due to two factors: the gas tax, last adjusted in 1993, has lost much of its purchasing power to inflation, and there’s a growing trend of vehicle fuel efficiency and electric vehicle adoption — leading to diminished contributions to the HTF through fossil fuel consumption. Today, many electric vehicles (EVs) operate on roads constructed with funds from gas taxes which they themselves do not contribute to.

What is the Fair SHARE Act?

In response to these challenges, the Fair SHARE Act has been proposed to impose a one-time $1,000 fee on new EV sales and a $550 fee on heavy battery modules. This proposal attempts to bridge the revenue gap caused by the lack of contributions from electric vehicles. Though this measure aligns with the average gas taxes paid over ten years — approximately $1,000 per driver — many critics view it as a simplistic and insufficient fix. Unlike the usage-based gas tax which adjusts with miles driven, this flat fee does not account for varying patterns of vehicle use.

The Future of Transportation Funding

As states implement alternative funding strategies, including the mileage-based user fees, experts believe a more sustainable solution lies in adopting a Vehicle Miles Traveled (VMT) tax. This funding model would levy charges based on the actual road usage rather than fuel consumption, addressing the growing issue presented by the rise of EVs. This approach would ensure that every driver contributes fairly to maintenance and upkeep costs based on how much they actually utilize the road network.

EVs: Driving New Conversations Around Funding

The increasing penetration of electric vehicles underscores a critical shift in how we think about transportation funding. While there is broad support for infrastructure improvements, many Americans are becoming more open to discussions about increased contributions to the HTF, even if those discussions involve new taxes. Polling suggests that people are willing to pay more if it means minimizing traffic and vehicle maintenance costs.

The Urgency of Reform

The lack of dedicated long-term funding sources for the Highway Trust Fund puts future transportation infrastructure at risk. With projections showing the HTF may run dry as early as 2028, it’s evident that decisive action is required. Each state has a stake in crafting a solution that requires contributions from all road users, including owners of electric vehicles. The question remains: how will lawmakers respond to these pressing challenges in the coming years?

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07.16.2025

Unpacking the One Big Beautiful Bill: Who Really Benefits?

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07.10.2025

How the One Big Beautiful Bill Act Impacts You: Positives and Drawbacks

Update Understanding the One Big Beautiful Bill Act The newly enacted One Big Beautiful Bill Act (OBBBA) encompasses significant changes within the tax landscape, bringing mixed outcomes for various stakeholders. This legislation intends to provide stability and stimulate economic growth, yet it also reveals points of contention that are worth examining. The Positives of the OBBBA: A Boost for Investment One of the law's key advantages lies in its focus on investment. The OBBBA makes expensing for investments in short-lived assets and domestic R&D permanent. This strategic move allows taxpayers to make immediate deductions for capital investments, eliminating previous tax penalties and fostering economic growth. Experts suggest that this adjustment could increase long-term GDP by around 0.7%, encouraging businesses to invest in their futures with confidence. Tax Simplification: A Step Forward Additionally, the OBBBA aims to simplify tax codes for individual income taxes by securing permanent extensions of the 2017 tax cuts. By maintaining a larger standard deduction and clarity around itemized deductions, the Act significantly eases the tax filing process for millions, providing stability and predictability essential for everyday budgeting. The Drawbacks: SALT Deduction and Gradual Returns However, it's not all good news. The Act raises the cap on the state and local tax (SALT) deduction to $40,000 for earners below $500,000, only temporarily, before returning to the original $10,000 cap. This shift has stirred debate among those with varying income levels in different regions, particularly where state taxes are high. Why Understanding These Changes Matters For individuals and business owners, grasping the implications of the OBBBA is crucial as these tax policies directly affect financial decisions, from investment planning to personal budgeting. Staying informed can make a significant difference, helping taxpayers optimize their financial strategies and adapt to new rules. Conclusion: Stay Engaged and Informed As community members navigate these changes, it’s vital to stay engaged and informed about potential adjustments that might impact our local economy. Understanding the One Big Beautiful Bill Act can empower you to make informed decisions that benefit both you and your community.

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