What, exactly, is the California mileage tax? (Spoiler: It's not actually a "mileage tax")

Assembly Bill 1421, is currently moving through the California Legislature, seeking to prolong the state's investigation into a mileage-based fee system that could eventually replace the gas tax.

If you are just tuning in, here is a full rundown of what AB 1421 is, the history behind the "road charge" concept (which is often, misleadingly, referred to as the "California mileage tax"), and the financial reality driving the proposal.

What AB 1421 Does

Assembly Bill 1421—introduced by Assembly Member Wilson—extends the timeline for the state to study and develop a road usage charge. specifically, it extends the existence of the "Road Usage Charge Technical Advisory Committee" and related research provisions until January 1, 2035. Under existing law, these provisions were set to expire on January 1, 2027.

A "Yes" vote on this bill does not immediately implement a mandatory tax on all drivers. Instead, it mandates that the California Transportation Commission (CTC) consolidate research and submit a comprehensive report to the Legislature by January 1, 2027.

This report must provide specific recommendations on how a road charge system would actually work, covering topics such as:

• Inequity mitigation: Addressing the financial impact on low-income drivers who may be forced to commute longer distances in less efficient vehicles.
• Commercial and Electric Vehicles (EVs): Analyzing the impact of a "weight-per-mile fee" on commercial trucks and the electric vehicle industry.
• Logistics: Identifying solutions for capturing revenue from out-of-state vehicles driving on California roads.

Why It Was Proposed

The bill seeks to consolidate research on alternatives to the gas tax, specifically focusing on how new fees would impact different drivers. While the "findings" regarding the gas tax shortfall were removed from the final text, the bill explicitly mandates that the commission analyze "the impact of a weight-per-mile fee for commercial and electric vehicles on the motor vehicle industry".

Additionally, the Legislative Counsel's Digest notes that existing law already tasks the state with assessing "the potential for mileage-based revenue collection as an alternative to the gas tax system" , a mandate this bill extends through 2035.

The Current shortfall:

In the 2023–24 fiscal year, fuel taxes and vehicle fees generated about $14 billion.

The Future Gap:

The Legislative Analyst's Office projects that gas tax revenue will decline by up to $4 billion annually by 2035. A separate study by the Mineta Transportation Institute estimates the loss could reach between $4.8 billion and $12.1 billion by 2040.

The bill argues that because EVs do not pay gas tax, the state lacks a mechanism to maintain roads despite these vehicles contributing to wear and tear.

The Legislative Context Behind AB 1421

AB 1421 builds upon a decade of legislative work, most notably Senate Bill 1077, passed in 2014.

SB 1077 (2014)

This legislation originally created the Road Usage Charge Technical Advisory Committee (RUC TAC). Its goal was to guide the development of a pilot program to assess mileage-based revenue collection as an alternative to the gas tax.

The 2017 Pilot

Following SB 1077, California conducted a pilot program involving over 5,000 vehicles which reported more than 37 million miles. This pilot simulated revenue collection through mock invoices to test the feasibility of the system.

AB 1421 essentially continues the work started by SB 1077, requiring the committee to incorporate findings from these previous state and academic sources into their new recommendations.

What the New Report Would Look Like

If AB 1421 passes, the CTC must consult with a wide range of stakeholders to draft the 2027 report. Required consultants include:

• Privacy Experts: To address concerns regarding data security and location tracking.
• Equity Organizations: To ensure environmental justice and fairness for disadvantaged communities.
• Industry Representatives: Including zero-emission vehicle manufacturers and local governments.

The bill explicitly states that any future road charge must be structured to appeal to both urban and rural communities, acknowledging that this transition will require "significant education, negotiation, and compromise".

Financial Stakes

The stakes of this legislation involve the solvency of California's transportation infrastructure. The state claims that without a new revenue mechanism, the decline in gas tax revenue will leave it unable to maintain the highway system.

The CTC projects that over the next decade, the state will collect $31.3 billion less in fuel excise tax revenue due to increased fuel efficiency and EV adoption. AB 1421 frames the road charge as a necessary evolution to capture revenue from ZEVs and ensure all road users contribute to maintenance costs.

Privacy and Implementation Safeguards

A major component of the research mandated by AB 1421 (and its predecessor SB 1077) involves privacy. The original SB 1077 required that the pilot program include at least one method of mileage reporting that does not rely on electronic vehicle location data.

AB 1421 continues this focus by explicitly requiring consultation with "privacy and data security experts" for the new report. The previous law also mandated that the agency ensure processes are in place to "safeguard the privacy of drivers" and strictly limited the disclosure of personal data to private entities