Rhode Island state lawmakers in June approved a fiscal year 2026 (FY 2026) budget that set the first registration fees for electric vehicles (EVs) in the state’s history and raised the state’s gas tax by 3 cents per gallon.
Annual registration fees will be $200 for each battery EV, $100 for each plug-in hybrid EV, and $50 for each hybrid EV, at least for the rest of FY 2026, which runs from July 1, 2025, through June 30, 2026, in Rhode Island. This is in addition to any existing state fees pertaining to gross vehicle weight.
“EVs don't pay gas tax, and that's what that's all about,” Southern New England Independent Automobile Dealers Association (SNEIADA) Executive Director Lou Tedeschi said of the EV provisions. “They're trying to level the playing field for the people that are paying taxes on the roads that the EVs are using, and EVs aren't paying anything.”
The budget law distinguishes hybrid EVs as vehicles primarily powered by an internal combustion engine (ICE) in conjunction with an electric motor.
The same legislation defines “plug-in hybrid” EVs as vehicles that can deliver power to the drivetrain solely through a battery-powered electric motor but that also incorporates the use of another fuel to power a combustion engine. These are vehicles capable of receiving energy from external sources such as outlets or charging stations.
SNEIADA’s auto dealer members don’t like “EV mandates” because buyers return them more frequently than ICE vehicles, Tedeschi said.
About 40% of purchased EVs go back onto the market within a year of purchase, he added.
“The infrastructure wasn't there, so charging was always an issue,” Tedeschi said. “For people that especially live in apartment buildings and that type of thing, limited charging areas are part of the issue.”
EV registration fees could rise again in Rhode Island in 2027.
The FY 2026 budget legislation directs the administrator of the Rhode Island Division of Motor Vehicles to submit a report to the state’s general assembly regarding “options to index or update” EV registration fees and any other charges for the three types of EVs outlined in the bill. The report must include information on EV fee practices in other states.
The FY 2026 budget law also raises the state fuel tax from 37 cents per gallon to 40 cents per gallon. The budget also changes how inflation will factor into any subsequent increases in the fuel tax.
Until this budget year, the tax has adjusted every two years based on inflation for the previous year. But starting July 1, 2027, the calculation will align with the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) determined as of Sept. 30 of the two prior years.
As of January 2024, Rhode Island had the 14th highest fuel tax of any state, just behind Ohio and slightly ahead of Utah, according to the Tax Foundation.
Rhode Island is facing an approximately $298 million state budget deficit for FY 2026, according to an analysis by the Rhode Island Public Expenditure Council.
Brian Bradley