California Considers Mileage-Based Driving Tax

State bill calls for study on potential road usage charge as gas tax revenues decline.

Feb. 4, 2026 at 7:55pm

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A California bill has passed the state assembly that would study the feasibility of a mileage-based tax or road usage charge to fund the state's roads and infrastructure as gas tax revenues decline due to the rise of electric and fuel-efficient vehicles. The bill does not propose a new driving fee, but rather calls for an examination of long-term funding solutions as the state's transportation needs grow.

Why it matters

California's gas tax revenue has been decreasing as more drivers switch to electric and fuel-efficient vehicles, creating a shortfall in funding for road maintenance and infrastructure. A mileage-based tax or road usage charge could provide a new revenue stream, but there are concerns about the potential impact on lower-income families who may have longer commutes.

The details

Assembly Bill 1421 has passed the California Assembly and is now in the Senate Rules Committee. The bill calls for a study to examine the feasibility of a mileage-based tax or road usage charge, which would have drivers pay based on the number of miles driven rather than the amount of gasoline purchased. The study would also explore ways to address equity concerns, such as providing discounts or exemptions for lower-income individuals or those with long commutes to lower-paying jobs.

  • AB 1421 has passed the California Assembly and is now in the Senate Rules Committee.
  • The study would report back to the legislature in 2027, with the potential to extend until 2035.

The players

Lori Wilson

Democratic State Assemblymember from Northern California who authored AB 1421.

Jean-Daniel Saphores

Professor at the UC Irvine Institute of Transportation Studies who commented on the need to address California's infrastructure funding shortfall.

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What they’re saying

“So there is a shortfall, and we need to find a way to maintain our roads, because we've delayed maintenance and the state of our roads is among the worst in the nation.”

— Jean-Daniel Saphores, Professor, UC Irvine Institute of Transportation Studies (nbcsandiego.com)

“It's true: It could be an issue, and we know that people often have to commute more because they cannot afford housing, right? Expensive housing is a chronic problem in California, but I think there are ways around it. And then, maybe, based on people's income, there would be ways for the state to give them some money to compensate them partly for the extra driving they have to do. So we just need to be more creative and to address equity problems as they arise.”

— Jean-Daniel Saphores, Professor, UC Irvine Institute of Transportation Studies (nbcsandiego.com)

What’s next

The bill requires a report back to the legislature in 2027, with the potential to extend the study until 2035.

The takeaway

California's transportation funding challenges highlight the need to explore new revenue models, such as a mileage-based tax or road usage charge, while also addressing the potential equity impacts on lower-income residents who may face longer commutes. The state's study will aim to find creative solutions to maintain roads and infrastructure in a sustainable way.