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AZ Changing EV License Tax Policy

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Aug. 27, 2021—Arizona is updating state vehicle registration tax policy in an effort to have owners of EVs and other alternatively powered vehicles more equally contribute to the state's infrastructure.

According to a report from the Gila Herald, the state currently calculates vehicle licensing taxes on new EVs using 1 percent of the MSRP, as opposed to 60 percent for ICE vehicles. That means if a driver spent $40,000 on a new vehicle, they'd only have to pay $16 in VLTs during the first year if it were an EV but would have to spend $672 if it were an ICE vehicle.

A phased-in change will happen through 2023 to bring EVs and other non-ICE vehicles up to the same rate.

"Bringing parity to VLT assessments is especially important for the continued maintenance and expansion of Arizona’s infrastructure as alternative fuel vehicles continue to increase in popularity in Arizona," the report said. 

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