Road User Charges & Pay-Per-Mile The Complete 2026 Guide
As electric vehicles reshape transportation, governments worldwide are transitioning from fuel taxes to distance-based charging. Understand the technology, privacy implications, and what it means for your wallet.
The Fuel Tax Gap: Why Change is Inevitable
For over a century, fuel taxes funded our roads. But as vehicles become more efficient and electrification accelerates, this revenue model is collapsing.
How We Got Here
The Original System (1919-Present)
Oregon introduced the first gas tax in 1919 at 1¢ per gallon. The federal gas tax started in 1932. This "user pays" model worked perfectly when all cars used gasoline proportional to road usage.
The Efficiency Problem (1990s-2010s)
As CAFE standards improved fuel efficiency, cars drove more miles per gallon. A car getting 40 MPG pays half the road tax of one getting 20 MPG, despite similar road wear.
The EV Revolution (2015-Present)
Electric vehicles pay zero fuel tax. As EVs reach 10%, 20%, 50% of the fleet, highway funding faces a catastrophic shortfall that flat annual fees cannot fully address.
US Highway Trust Fund Revenue vs. Needs
*Projected based on current EV adoption rates
Annual shortfall in US Highway Trust Fund by 2030
Federal gas tax unchanged since 1993 (lost 40% to inflation)
EVs projected on US roads by 2030 paying $0 fuel tax
Of US bridges need repair; 7.5% are structurally deficient
The Math: Why Flat EV Fees Don't Work
Gas Car (25 MPG)
12,000 miles/year
Hybrid (50 MPG)
12,000 miles/year
Electric Vehicle
12,000 miles/year
The Reality: Most states now charge EVs flat fees of $100-$225/year, but this doesn't scale with usage. Someone driving 5,000 miles pays the same as someone driving 25,000 miles.
A Global Challenge
United States
Federal + 50 State Systems
United Kingdom
Vehicle Excise Duty Reform
Germany
Kfz-Steuer Evolution
New Zealand
RUC Pioneer Since 1978
Australia
State-Level RUC Trials
European Union
Eurovignette Directive
The Bottom Line
The fuel tax system that funded roads for a century is fundamentally broken. With EVs paying nothing and hybrids paying half, the burden falls increasingly on those who can least afford new vehicles. Road User Charges offer a fairer, more sustainable alternative—but the transition requires careful planning to address privacy concerns and ensure equity.
Active RUC Pilot Programs Around the World
From New Zealand's 47-year-old system to Oregon's cutting-edge OReGO program, here's how distance-based road charging is being implemented globally.
OReGO
USA's FirstOregon's Road Usage Charge Program
Program Launch Year
Per Mile Rate
Active Participants
Reporting Options
How It Works
Drivers pay 1.9¢ per mile driven. For gas vehicles, fuel tax paid is credited back, so you only pay the difference. EVs pay the full per-mile rate.
Privacy Options
Choose from: GPS-enabled device (location-aware), OBD-II plug (mileage only), or odometer reporting (manual readings). Your choice, your privacy level.
Results
94% participant satisfaction. Proven technology works. Data shows fairer distribution of road costs. Model being adopted by other states.
United States: State-Level Programs
Utah Road Usage Charge
Launched 2020
Virginia Mileage Choice
Launched 2022
California Road Charge
Pilot 2016-2017, Planning Phase
RUC West Coalition
Multi-State Partnership
International Programs
New Zealand RUC
Gold StandardThe World's Most Mature Distance-Based System
How It Works
Purchase RUC licenses in 1,000km blocks online, at post offices, or petrol stations.
Track your odometer - you must buy more licenses before exceeding purchased distance.
Rates based on weight - heavier vehicles pay more per km for road wear.
2026 RUC Rates (per 1,000km)
Key Takeaway
New Zealand proves RUC works at scale. The system has operated for 47 years with high compliance rates. EV exemptions ended in April 2024, and the transition was smooth. This is the model other countries are studying.
Switzerland LSVA
Heavy Vehicle Fee
Austria GO-Maut
Highway Toll System
Germany LKW-Maut
Truck Toll System
Global RUC Timeline
New Zealand RUC Launches
World's first national distance-based road charge for diesel vehicles.
Switzerland LSVA
First satellite-based truck tolling in Europe using GPS/GNSS.
Germany LKW-Maut
Largest satellite-based truck toll network covering all autobahns.
Oregon OReGO
First US passenger vehicle RUC program launches with multiple privacy options.
Rapid US Expansion
Utah, Virginia launch programs. 23+ states considering legislation. Federal pilot funding approved.
Projected Full Transition
Most developed countries expected to adopt RUC as primary road funding mechanism.
Privacy & Technology: How Mileage Tracking Works
The biggest concern about pay-per-mile systems is privacy. Here's a transparent look at the technology options and what data is actually collected.
Addressing the Elephant in the Room
"The government will track everywhere I go!" This is the #1 objection to road user charges. It's a valid concern, and policymakers have heard it. That's why modern RUC programs offer multiple reporting options—including methods that collect zero location data.
OReGO Privacy Poll
Source: Oregon DOT OReGO Participant Survey 2024
Mileage Reporting Options Compared
Manual Odometer
Report odometer readings periodically (photo upload or inspection)
Total miles only
OBD-II Plug-In
Device plugs into car's diagnostic port, reports mileage only
Mileage, VIN, timestamps
GPS-Enabled
Location-aware device that can distinguish road types and states
Location, mileage, road type
Time Permit
Pay flat fee for unlimited miles during a time period
None (payment only)
How OBD-II Devices Work
Plug Into Your Car
The OBD-II port is under your dashboard (mandated since 1996). The device is about the size of a USB stick.
Reads Odometer Data
Device reads your car's odometer through the standard OBD-II protocol. No modifications to your vehicle.
Transmits Mileage Securely
Encrypted cellular connection sends only: total miles, VIN, and timestamp. No location, speed, or driving behavior.
Monthly Bill Generated
You receive a bill for miles driven × per-mile rate. Gas car drivers get fuel tax credits deducted.
Data Protection Measures
Encryption in Transit & at Rest
All data is encrypted using AES-256 standard, the same used by banks.
Private Vendor Administration
In most programs, private companies handle data. Government only receives aggregate billing info.
Data Minimization
Programs are designed to collect only what's needed for billing—nothing more.
Legal Protections
Most state programs include laws preventing data use for law enforcement or insurance purposes.
Data Retention Limits
Location data (if collected) is typically deleted within 30 days of processing.
Reality Check: What You Already Share
Concerned about RUC tracking? Here's what various services already know about your driving:
Google/Apple Maps
- • Every trip origin & destination
- • Exact routes taken
- • Stops along the way
- • Time spent at each location
- • Driving speed patterns
Your Car (Connected)
- • GPS location (continuous)
- • Acceleration/braking patterns
- • Seatbelt usage
- • Audio/voice commands
- • Camera footage (some models)
RUC (Non-GPS Option)
- • Total miles driven
- • Vehicle identification
- • Monthly reporting dates
- • No location data
- • No driving behavior
The irony: Many people who fear RUC tracking already share far more data with tech companies and automakers.
Common Privacy Questions
Can law enforcement access my RUC data?
Most state RUC programs have explicit legal protections. For example, Oregon law (ORS 319.915) prohibits using OReGO data for law enforcement purposes. However, protections vary by state, so check your program's specific privacy policy.
Will my insurance company see how I drive?
No. RUC programs are completely separate from insurance. Data is not shared with insurers. Some states have laws explicitly prohibiting this. Note that some insurers offer separate telematics programs, but those are voluntary and unrelated to RUC.
What if I drive on private roads?
GPS-enabled options can exclude private road miles from charges. For non-GPS options, some programs offer refund mechanisms for documented off-road driving. New Zealand's system has a refund process for farm vehicles used on private land.
How long is my data stored?
Varies by program. OReGO deletes location data within 30 days. Billing records (total miles, amounts) are kept longer for accounting purposes. Most programs follow data minimization principles and delete detailed data as quickly as possible.
Can I switch between tracking methods?
Yes, in most programs. You can typically change your reporting method at any time. Start with manual odometer reporting, then switch to OBD-II if you prefer automation. The choice is yours.
Flat Fees vs. Pay-Per-Mile: An Honest Assessment
Both systems have merits. Here's a balanced look at flat annual fees versus distance-based road user charges.
Flat Annual Fee
Current system in most US states
Advantages
-
Simple and Predictable
Pay once, know your annual cost upfront. No tracking, no monthly bills.
-
Zero Privacy Concerns
No devices, no data collection, no tracking of any kind.
-
Great for High-Mileage Drivers
If you drive 20,000+ miles/year, a flat fee is usually cheaper.
-
Cheap to Administer
Added to registration, minimal bureaucracy or tech infrastructure.
Disadvantages
-
Unfair to Low-Mileage Drivers
Someone driving 5,000 miles pays the same as someone driving 25,000.
-
Doesn't Scale with Usage
No connection between road use and road payment. Heavy users get a discount.
-
Often Too High or Too Low
Political challenges in setting "right" amount. Currently $100-$225 across states.
-
Can't Support Future Needs
No mechanism for congestion pricing, variable rates, or cross-state coordination.
Pay-Per-Mile (RUC)
Emerging system worldwide
Advantages
-
Pay What You Use
Drive less, pay less. Fair and proportional to actual road usage.
-
Benefits Low-Mileage Drivers
Retirees, remote workers, urban dwellers with transit access pay less.
-
Sustainable Revenue
Works regardless of fuel type. Future-proof as fleet electrifies.
-
Enables Future Features
Congestion pricing, variable rates by road type, cross-state coordination.
Disadvantages
-
Privacy Concerns
Even with non-GPS options, some tracking is required. Trust is essential.
-
Complex Administration
Requires technology infrastructure, devices, billing systems, support.
-
Could Impact Rural Drivers
Long-distance rural commuters might pay more. May need rural adjustments.
-
Transition Challenges
Moving from fuel tax requires careful phase-in to avoid confusion.
Who Benefits Under Each System?
Low-Mileage Driver
~5,000 miles/year
Average Driver
~12,000 miles/year
High-Mileage Driver
~25,000 miles/year
Rural Commuter
~18,000 miles/year
What Experts Say
"Road user charges are the most equitable approach to funding highways. They restore the user-pay principle that made the Interstate Highway System possible."
Robert Habans
Transportation Policy Director, Eno Center
"Privacy concerns are valid but solvable. Modern RUC systems offer choices that protect privacy while ensuring fair road funding. The key is transparency."
Dr. Jennifer Weiss
MIT Energy Initiative
"The fuel tax is a brilliant, elegant system that's becoming obsolete. We need to phase in RUC carefully while preserving what worked about the old approach."
Michael Pagano
University of Illinois Chicago
"Rural communities worry about RUC impacts, but data from OReGO shows most rural participants actually save money compared to flat fees."
Sharon Mau
Oregon DOT RUC Program Manager
The Balanced View
Neither system is perfect. Flat fees are simple but unfair; RUC is fair but complex. The best approach likely combines both: offer drivers a choice between flat fees and pay-per-mile, as Utah and Virginia already do. This preserves privacy options for those who prefer them while allowing low-mileage drivers to save money.
The transition will take time. Most experts expect a 10-15 year phase-in period where both systems coexist. The goal isn't to track everyone—it's to ensure roads are funded fairly as vehicles electrify.
The Future of Road Funding: What to Expect by 2035
The transition from fuel taxes to distance-based charging is inevitable. Here's the roadmap experts predict.
Projected Transition Timeline
Current State
- • 4 active state programs
- • 23+ states considering RUC
- • 38 states have EV fees
- • Federal pilot funding active
Expansion Phase
- • 15-20 state programs
- • Federal RUC framework
- • Interstate coordination
- • EVs 30%+ of new sales
Majority Adoption
- • 40+ state programs
- • New car RUC standard
- • Fuel tax phase-out begins
- • EVs 50%+ of fleet
Full Transition
- • Universal RUC
- • Fuel tax eliminated
- • Congestion pricing active
- • Connected car integration
Technologies Shaping the Future
Connected Vehicles
Most new cars already have cellular connectivity. Future RUC could be built into vehicles directly, eliminating aftermarket devices.
Privacy-Preserving Tech
New cryptographic techniques allow mileage verification without revealing location. Zero-knowledge proofs could enable "trust but verify."
Smart Infrastructure
Road sensors and charging infrastructure could automatically report miles. Wireless EV charging could integrate billing directly.
The Congestion Pricing Connection
RUC infrastructure enables smarter road pricing. Instead of charging the same per mile everywhere, future systems could:
Time-of-Day Pricing
Higher rates during rush hour to spread traffic
Zone-Based Pricing
Higher rates in congested urban centers (like London's ULEZ)
Road Type Differentiation
Different rates for highways vs. local roads
Dynamic Real-Time Pricing
Rates that adjust based on current traffic conditions
Congestion Pricing in Action
London Congestion Charge
Since 2003
Singapore ERP
Since 1998
Stockholm Congestion Tax
Since 2007
NYC (Coming 2025)
Approved, awaiting launch
What This Means For You
Today
Check if your state offers RUC. Low-mileage EV drivers may save money versus flat fees today.
Next 5 Years
Expect more states to offer RUC options. Plan for distance-based costs when buying your next EV.
By 2035
RUC will likely be standard for EVs. Your next vehicle may have built-in reporting.
Stay Informed
Follow your state DOT and local news. RUC policies are changing rapidly.
Frequently Asked Questions
Everything else you wanted to know about Road User Charges
How is RUC different from tolls?
Tolls are charged for specific roads (like toll highways or bridges). RUC is a general road tax based on total miles driven, regardless of which roads you use. Think of tolls as pay-per-use for premium roads, while RUC is like a utility bill for all road usage.
Will I pay both RUC and fuel tax?
No—programs are designed to avoid double-taxation. In OReGO, for example, gas car drivers receive a credit for fuel taxes paid. You only pay the net difference. EVs pay the full RUC amount since they don't pay fuel tax. Eventually, fuel taxes will be phased out entirely.
What if I drive to another state?
GPS-enabled options can track which state you're in and apply appropriate rates. Non-GPS options typically charge all miles at your home state rate. The RUC West coalition is working on interstate coordination so you're not double-charged. Long-term, expect seamless multi-state systems.
Are electric motorcycles and scooters included?
Policies vary. Most current programs focus on cars and light trucks. In New Zealand, motorcycles under 600cc are exempt from RUC. As electric motorcycles become more common, expect specific policies to develop. Small electric scooters and bikes are generally not subject to road charges.
What about commercial vehicles and trucks?
Heavy vehicles already pay distance-based charges in many countries (Germany, Switzerland, Austria, New Zealand). Rates are higher for trucks due to greater road wear. In Europe, the Eurovignette directive mandates distance-based tolling for trucks over 3.5 tonnes on major routes.
Can I get a refund for off-road driving?
GPS-enabled options can automatically exclude off-road miles. For non-GPS options, some programs offer refund processes with documentation. New Zealand has an established system for agricultural vehicles. Expect refund mechanisms to be part of any full RUC rollout.
How do I sign up for RUC in my state?
Check your state DOT website. Oregon: myorego.org. Utah: roadusagecharge.utah.gov. Virginia: mileagechoice.virginia.gov. If your state doesn't have a program yet, you'll continue paying flat EV fees or fuel taxes as applicable.
Will rental cars be subject to RUC?
Eventually, yes. Rental companies will likely handle RUC reporting and pass costs to renters based on miles driven. Some rental companies already do this for toll roads. In New Zealand, rental EVs include RUC in the rental price.
Stay Ahead of the Curve
The transition to Road User Charges is happening. Use our tools to understand current costs and plan for the future.
Related Resources
RUC & Road Funding Glossary
Key terms and definitions to help you understand road user charges
Road User Charge (RUC)
A distance-based fee where drivers pay for road usage based on actual miles or kilometers driven, rather than through fuel taxes.
VMT (Vehicle Miles Traveled)
The total number of miles driven by a vehicle. VMT tax and RUC are often used interchangeably to describe pay-per-mile systems.
MBUF (Mileage-Based User Fee)
Another term for RUC, emphasizing that fees are based on actual mileage rather than vehicle type or fuel consumption.
Highway Trust Fund (HTF)
The US federal fund that finances highway and transit projects, primarily funded by fuel taxes. Facing insolvency as fuel tax revenue declines.
OBD-II (On-Board Diagnostics)
A standardized port in vehicles (since 1996) that allows diagnostic devices to read vehicle data including odometer readings.
Telematics
Technology that combines telecommunications and GPS to collect and transmit vehicle data, used in some RUC reporting systems.
Congestion Pricing
Variable road pricing that charges higher rates during peak traffic times to reduce congestion and encourage off-peak travel.
Eurovignette
EU directive governing road charges for heavy goods vehicles, setting rules for distance-based and time-based tolling across member states.
EETS (European Electronic Toll Service)
A single contract system allowing trucks to pay tolls across multiple European countries with one device and one account.
Fuel Tax Gap
The growing difference between fuel tax revenue and road infrastructure needs, caused by more efficient vehicles and EV adoption.
GNSS (Global Navigation Satellite System)
Satellite systems (GPS, Galileo, GLONASS) used for location tracking in some RUC and tolling systems.
OBU (On-Board Unit)
A device installed in vehicles to track mileage and/or location for road charging purposes, communicating with toll infrastructure.
(New Zealand since 1978)
RUC Programs
Fuel Tax Gap by 2030
RUC Adoption