California completed a six-month pilot program testing a per-mile road charge as a potential replacement for the state’s gas tax, with findings expected by the end of 2025. The program marks the state’s second major road charge test as transportation officials confront a funding crisis driven by rising electric vehicle adoption.
The Funding Problem
California’s gas tax currently generates approximately 80% of the state’s road maintenance revenue. At roughly 61 cents per gallon, it’s the highest gas tax rate in the nation.
But the state faces a contradiction: California has mandated that all new car sales be zero-emission vehicles by 2035, while simultaneously relying on gas tax revenue to fund road infrastructure. As hybrid and electric vehicles use little to no gasoline, they pay minimal fuel taxes despite using the same roads.
Legislative analysts project California will lose $5 billion in transportation revenue by 2035 when the EV mandate takes full effect. The state’s gas tax revenue share has already declined 5% since 2016.
The Road Charge Pilot
California’s Road Charge Collection Pilot ran from August 2024 through January 2025 under Senate Bill 339, passed in 2021. Unlike the state’s earlier 2017 pilot with volunteer drivers, this program required participants to pay actual road charges based on miles driven.
The pilot tested a fee of 2 to 4 cents per mile—with 3 cents per mile used as the standard example rate. Participants selected from three mileage reporting methods:
- Plug-in device: Inserted into the vehicle’s dashboard, with optional GPS tracking
- Vehicle telematics: Used the vehicle’s built-in connected car system
- Manual odometer reporting: Drivers submitted monthly photos of their odometer
Participants were billed monthly for road charges and received credits at the end of the study for gas taxes paid during the pilot period. Electric vehicle owners received partial credits for the Road Improvement Fee paid through annual registration.
Cost Impact
The financial impact varies significantly based on driving patterns. A driver commuting from Hanford to Fresno five days per week in a Toyota Camry would pay approximately $11 per week at the 3-cent rate—roughly $44 to $48 monthly just for commuting, excluding other trips.
Rural drivers and those with long commutes would shoulder a disproportionate share of the burden compared to urban residents who drive shorter distances. This represents a fundamental shift from the current system, where fuel efficiency and vehicle type determine tax payments.
Previous Results
California’s 2017 Road Charge Pilot enrolled more than 5,000 volunteer drivers who logged 37 million miles over nine months. That study found that 73% of participants considered a road charge fairer than the gas tax.
The federal government has supported California’s road charge research through nearly $6.7 million in grants from the Surface Transportation System Funding Alternatives program to test collection mechanisms, emerging technologies, and GPS viability for determining public versus private road usage.
What’s Next
The California Department of Transportation (Caltrans) is expected to release the pilot program findings by the end of December 2025. A final report to the Legislature is due by December 2026.
The state faces competing pressures: maintaining road infrastructure funding while pursuing aggressive climate goals through vehicle electrification. Whether California adopts a statewide road charge will depend on the pilot results, legislative appetite for the policy shift, and public acceptance of the new taxation model.
