Road Taxes and Funding by State, 2026

Why It Matters

The funding shortfall forces all taxpayers to subsidize road use, distorting transportation markets and risking under‑investment in infrastructure. Shifting to a VMT tax could align costs with actual road wear and stabilize the Highway Trust Fund.

Key Takeaways

• Maryland and New Jersey fully fund highways with user fees.
• 41 states reduced user‑revenue coverage in 2025‑26.
• Gas tax revenue declines due to EVs and efficiency.
• National average user‑fee coverage fell to 66.5%.
• VMT tax proposed to align fees with road wear.

Pulse Analysis

User‑fee systems have long been praised for matching road users with the costs of maintenance, but the model is straining under modern pressures. Inflation erodes the real value of fixed‑rate fuel taxes, while advances in fuel efficiency and the rapid adoption of electric vehicles reduce the volume of gasoline sold, the traditional revenue engine for state highway funds. As a result, many jurisdictions are forced to tap general‑purpose tax pools, effectively spreading road costs across all taxpayers, regardless of driving habits.

State‑level data reveal stark disparities. Maryland and New Jersey stand alone in fully financing their road networks through user fees, yet the national average fell to 66.5% in FY 2023, a seven‑point drop from the prior year. Notable regressions include Idaho, Tennessee, Georgia, Wyoming, and South Carolina, where spending growth outpaced modest revenue gains. The cumulative effect is a widening fiscal gap that threatens timely maintenance, increases congestion, and pressures legislators to find stop‑gap solutions such as one‑time electric‑vehicle surcharges.

Policymakers are increasingly eyeing a vehicle‑miles‑travelled (VMT) tax as a more resilient funding mechanism. By charging drivers per mile, a VMT system directly ties revenue to road wear, accommodates electric and highly efficient vehicles, and can be indexed to inflation. Federal leadership—through the Highway Trust Fund or legislation authorizing statewide pilots—could accelerate adoption and provide a uniform framework. If implemented thoughtfully, a VMT tax promises a sustainable revenue stream, fairer cost distribution, and the fiscal stability needed to modernize America’s aging road infrastructure.