New law means lower vehicle registration fees in Virginia, but added highway use fee

As part of a package of new transportation laws passed by the General Assembly and signed into law by Governor Ralph Northam this year, you can expect lower vehicle registration fees in the future.

According to a statement from the Virginia Department of Motor Vehicles (DMV), the transportation package was meant "to create sustainable funding for transit, rail, and roads, invest in systemic safety improvements, and support a multimodal system in Virginia."

As part of the funding changes that come with package,

, vehicle registration fees will be cut by $10, which comes out to a 25% reduction for most Virginians.

The package also comes with an increase of the statewide gas tax by five cents in 2020 and then another 5 cents in 2021, as well as a new highway use fee.

Like most laws passed in Virginia, it will take effect on July 1.

"During this legislative session, the General Assembly delivered on our promise to improve the lives of Virginians in every corner of the Commonwealth,” said Speaker of the House of Delegates Eileen Filler-Corn. “I am proud that, by passing this important legislation, we have made our roads safer and created a sustainable transportation funding structure, all while lowering vehicle registration fees so Virginians can keep more of their hard-earned money. These measures are more critical now than ever as we move into the Commonwealth’s economic recovery from the COVID-19 pandemic and build our shared future together.”

Any customer who has a vehicle registration expiring in July and later will see the fee reduction reflected in their renewal notices, though, due to COVID-19,

.

Any customer whose credential expired between March 15 and May 31 gets 90 days from the expiration date to renew, and credentials expiring from June 1 to July 31 have until August 31 to get renewed.

Vehicle registrations that expire in March, April, and May are also extended for 90 days. Those expiring in June are extended for 60 days and those expiring in July are extended for 30 days.

Here's a breakdown of the new registration fees that will go into effect on July 1:

• Passenger Vehicles 4,000 lbs. or less go from $40.75 to $30.75

• Passenger vehicles 4,001 lbs. or greater go from $45.75 to $35.75

• Motorcycles go from $28.75 to $24.75

• Mopeds go from $20.25 to $18.25

• Autocycles go from $25.75 to $21.75

• Pickup and panel trucks 4,000 lbs. or less go from $40.75 to $30.75

• Pickup and panel trucks 4,001 to 6,500 lbs. go from $45.75 to $35.75

• Pickup and panel trucks 6,501 to 10,000 lbs. go from $51.75 to $44.75

Motorhome registration fees stay the same.

“This legislation restructures Virginia’s transportation funding model and is based on equity and a commitment to a multimodal system,” said Secretary of Transportation Shannon Valentine. “The investments support Virginia’s economic recovery and transform transportation solutions for generations to come.”

The new package of laws also implements a new highway use fee, which is expected t be $19 in year one for most vehicles on the roads.

The DMV says the fee came out of a year-long study of the sustainability of transportation revenues in Virginia that investigated the increasing number of vehicle miles traveled by Virginians alongside a decline of revenue.

They say that's largely due to better fuel efficiency in vehicles, so the state gets less revenue from gas taxes than in the past.

KPMG, the consultant that carried out the study, estimated the loss of nearly 33% of gas tax revenues for Virginia by 2030 due to fuel efficiency, or approximately $260 million, resulting in transportation funding becoming unsustainable over the next decade.

“The challenge was to identify a system that would maintain incentives for fuel-efficient vehicles while creating sustainable funding that was fair for all drivers,” said Nick Donohue, Director of the Office of Intermodal Planning and Investment.

So the new law repeals the $64 annual fee on all-electric and alternative fuel vehicles and introduces a highway use fee that's tiered based on a vehicle's fuel efficiency.

Officials say the average of $19 for most vehicles will represent about 85% of the difference between the amount of fuel tax on a vehicle that gets the average 23.7 mpg and the amount of fuel tax on a more fuel-efficient vehicle – a 15% discount based on the vehicle’s fuel economy.

For example, if the driver of an average car pays $100 in gas tax, and the driver of a fuel-efficient car pays $80 in gas tax, then the fee would be as follows: $100 - $80 = $20 x 85% = $17. A fuel-efficient vehicle would save approximately $215 in gas costs with gas at $2.20/gallon.

The law takes effect July 1.