David T. Stevenson has spent 12 years as the director of the Center for Energy & Environmental Policy for the Caesar Rodney Institute.
Delaware’s new $60 annual vehicle registration fee on gasoline hybrids should be cut in half. The math shows that a fair charge would be closer to $30 a year.
Over the summer, the Delaware legislature passed House Bill 164 to begin charging an annual vehicle fee to make up for lost fuel taxes from cars and trucks that use little or no gasoline or diesel fuel. These bills are going out now. The original aim was to address fully electric vehicles, which use no fuel, and therefore, their owners pay no gas tax. However, the legislation also includes gasoline hybrids. The rates were based on a University of Delaware study.
Under the new law, EV owners will be charged $110 a year, while hybrid owners will be charged $60 a year. Legislators should reconsider the annual fee for hybrids.
Fuel tax math
A straightforward calculation shows that the $60 vehicle fee is about twice as high as it should be. In its latest edition of “Delaware’s Annual Traffic Statistical Report,” the Delaware State Police note that 787,567 licensed drivers in the state travel a total of around 9 billion miles a year — an average of about 11,506 miles for each motorist. The average fuel economy in Delaware was 26.4 mpg in 2024, according to the iSeeCars report, “Understanding MPG Trends Across States.”
That means that the average driver uses about 436 gallons of gas a year. With Delaware’s fuel tax of 23 cents per gallon, each driver pays about $100.28 a year in state fuel taxes.
A previous Caesar Rodney Institute study found that the average gasoline hybrid gets 69% better fuel economy than a standard vehicle, or 44 mpg. That means that a hybrid owner would use only 258 gallons of gas a year, paying roughly $59.34 a year in fuel taxes — about $41 less than the average driver.
Upfront costs already paid
In addition, hybrid buyers pay a higher initial vehicle document fee of about $144.50 ($3,400 premium purchase price times a 4.25% fee). The Bureau of Transportation Statistics estimates that vehicles last about 12.6 years, so the annualized cost of that premium is about $11 a year going into the Transportation Trust Fund. When added to the fuel tax, the actual “underpayment” drops to about $30 a year — not $60. We also don’t know the administrative cost for this program, which could further reduce the benefit of the tax.
Why it matters
The $60 annual fee for hybrid owners should be cut to $30 — or better yet, repealed. Electric vehicle buyers receive a state subsidy of $1,000-$2,500 off the purchase price and about $500 to install a home charging station. These incentives exist because the state supports reducing gas use. Gasoline hybrid buyers, however, receive no subsidies, even though hybrids cost an average of $3,400 more to purchase. Hybrid buyers deserve recognition for their investment in vehicles that significantly reduce fuel consumption.
The bottom line
Given the higher costs and limited revenue, legislators should reconsider the $60 annual fee, which could cost nearly $30 per vehicle just to administer.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
