Delaware’s New Hybrid Vehicle Fee Doesn’t Add Up
Hybrid owners already pay fuel taxes and higher purchase costs - yet now face a $60 annual fee that delivers little revenue and questionable results.
By David T. Stevenson, Director
Center for Energy & Environmental Policy
September 15, 2025 (updated Sept. 24, 2025)
Delaware's new $60 annual vehicle registration fee on gasoline hybrids should be cut in half. The math shows a fair charge would be closer to $30 a year.
This summer, the Delaware Legislature passed House Bill 164 to begin charging an annual vehicle fee to make up for lost fuel taxes from vehicles that use little or no gasoline or diesel fuel. These bills are going out now. The original aim was to address fully electric vehicles (EVs), which use no fuel and therefore pay no gas tax. However, the legislation also included gasoline hybrids. The rates were based on a University of Delaware study.
Under the new law, EV owners will be charged $110 a year, while hybrid owners will be charged $60 a year. Legislators should reconsider the annual charge for hybrids.
Fuel Tax Math
A straightforward calculation shows the $60 vehicle fee is about twice as high as it should be. In its latest edition of Delaware's Annual Traffic Statistical Report, the Delaware State Police report shows 787,567 licensed drivers in the state travel a total of 9,062 million miles a year - an average of 11,506 miles for each driver. The average fuel economy in Delaware was 26.4 miles per gallon (MPG) in 2024, according to the iSeeCars report on Understanding MPG Trends Across States.
That means the average driver uses about 436 gallons of gasoline a year. With Delaware's motor fuel tax of 23 cents per gallon, each driver pays about $100.28 a year in state fuel taxes.
A previous Caesar Rodney Institute study found that the average gasoline hybrid gets 69% better fuel economy than a standard vehicle, or 44 MPG. That means a hybrid owner would use only 258 gallons of gasoline a year, paying roughly $59.34 a year in fuel taxes - about $41 less than the average driver.
Up-front Costs Already Paid
In addition, hybrid buyers pay a higher initial vehicle document fee of about $144.50 ($3,400 premium purchase price x 4.25% fee), The Bureau of Transportation Statistics estimates vehicles last about 12.6 years, so the annualized cost of that premium is about $11 a year going into the Transportation Trust Fund. When added to the fuel tax, the actual "underpayment" drops to about $30 a year - not $60. We also don’t know the administrative cost for this program that could further reduce the benefit of the tax.
Why it Matters
The $60 annual fee for hybrid owners should be cut to $30 - or better yet, repealed. EV buyers receive a state subsidy of $1,000 to $2,500 off the purchase price, and about $500 to install a home charging station. These incentives exist because the state supports reducing gasoline use. Gasoline hybrid buyers, however, receive no subsidies, even though hybrids cost an average of $3,400 more to purchase. Hybrid buyers deserve recognition for their investment in vehicles that significantly reduce fuel consumption.
The Bottom Line
Given the higher costs and limited revenue, legislators should reconsider the $60 annual fee, which could cost nearly $30 per vehicle just to administer.