By Rebecca Wallis
Salem, OR – October 9, 2025
Oregon lawmakers ended their 2025 Special Session by passing House Bill 3991, a sweeping transportation funding package that raises fuel taxes, vehicle registration fees, and payroll taxes, and introduces a mandatory per-mile charge on electric and hybrid vehicles. Supporters say the bill will keep the state’s roads from crumbling.
Opponents, calling it a significant tax increase during an economic slowdown, have launched a referendum effort; more information is posted at notaxor.com. Critics warn the measure will ripple through every corner of Oregon’s economy, from household budgets to the trucking industry, while leaving voters little time to challenge it.
New Taxes in a Strained Economy
Under HB 3991, the following increases will take effect:
-
Fuel Tax Increase:
-
Gasoline taxes rise from 40 cents to 46 cents per gallon (effective 91 days after adjournment sine die).
-
Diesel taxes will align to the same rate starting July 1, 2029.
-
This marks the largest one-time fuel tax increase in Oregon’s history.
-
-
Under HB 3991, the following registration and title fee changes will take effect December 31, 2025, based on amendments to ORS 803.420 (registration fees) and ORS 803.090 (titles):
-
Passenger Vehicle Registration:
-
Increases from $43 to $85 per year (base increase of $42), with total two-year registration costs adjusted according to vehicle efficiency:
-
Fees are tiered by miles per gallon (MPG), incorporating additional “privilege fees” under ORS 803.422:
-
0–19 MPG: Increases from $126 to $210
-
20–39 MPG: Increases from $136 to $220
-
40+ MPG non-OReGO vehicles: Increases from $156 to $300
-
Electric vehicles (EVs) non-OReGO: Increases from $316 to $460
-
-
OReGO-enrolled vehicles will also pay the updated $170 base two-year fee, but remain exempt from the privilege fees, since they pay a per-mile road-usage charge instead.
-
-
Motorcycle Registration:
-
Increases from $88 to $172 for a two-year registration.
-
-
Trailer Registration:
-
Light and utility trailer fees increase from $63 to $105 for a two-year registration.
-
-
Title Fees:
-
Current tiered fees (pre-HB 3991) are $101, $106, $116, and $192 depending on MPG/EV status (previously updated under HB 2017).
-
Each tier increases by $139, bringing new totals to:
-
$240 for 0–19 MPG vehicles
-
$245 for 20–39 MPG vehicles
-
$255 for 40+ MPG vehicles
-
$331 for electric vehicles (EVs)
-
-
-
-
Payroll Tax:
-
Doubles from 0.1 percent to 0.2 percent of employee wages for all employers subject to Oregon payroll tax, beginning January 1, 2026.
-
The rate will revert to 0.1 percent on January 1, 2028.
-
The Legislative Revenue Office projects that HB 3991 will generate $791 million in new revenue by mid-2027, and nearly $900 million per biennium after that.
Half of that revenue will go to the Oregon Department of Transportation, 30 percent to counties, and 20 percent to cities, with most of the money directed toward maintenance and operations rather than new construction.
For Oregon families already facing record housing costs, rising utility bills, and inflation-driven food prices, the new transportation taxes mean higher prices at the pump, increased delivery costs, and added pressure on local businesses to raise prices to stay afloat.
The Legislative Revenue Office also warned, in its August 31, 2025 analysis, that fuel tax increases have “broad effects on production and transportation costs throughout the economy,” since nearly every consumer good depends on freight movement. Even modest per-gallon increases can raise costs at multiple stages of production and shipping, affecting everything from food to construction materials.
Impact on Working Oregonians and Small Business
For commuters, the fuel tax translates directly into higher monthly costs. For businesses—especially trucking, agriculture, and manufacturing—additional fees and taxes will add up quickly.
The measure includes the following changes affecting commercial operations:
-
Weight-Mile and Carrier Fees:
-
Adjustments begin July 1, 2027, with another round on July 1, 2029.
-
Designed to rebalance costs between heavy and light vehicles.
-
-
Diesel Fuel Tax Expansion:
-
Starting July 1, 2029, diesel (including biodiesel and renewable diesel) will be taxed at the same 46-cent rate as gasoline.
-
Dyed off-road diesel remains exempt.
-
-
Road Usage Charge (RUC):
-
Beginning July 1, 2027, Oregon will phase in a mandatory per-mile tax on non-gas-powered vehicles.
-
Charge equals 5 percent of the fuel tax rate per mile, or a flat $340 annual fee.
-
Rollout schedule:
-
Used electric vehicles on July 1, 2027
-
New electric vehicles on January 1, 2028
-
Plug-in hybrids and hybrids on July 1, 2028
-
All other vehicles currently under RUC by July 1, 2031
-
-
Governor Tina Kotek has directed ODOT to prioritize new revenue for road maintenance and operations.
Small business owners say those funds will not offset the financial strain created by these immediate increases.
Short-haul and agricultural haulers, already struggling with narrow profit margins, predict higher freight rates that will ultimately hit consumers at grocery stores and hardware shelves across the state.
A Referendum Squeezed by the Calendar
Opponents have filed a referendum petition seeking to overturn HB 3991, but they face what election-law experts describe as a built-in obstacle course.
The chief petitioners leading this Republican-backed effort are Jason Williams, director of the Taxpayer Association of Oregon, Senate Minority Leader Bruce Starr (R-Dundee), and Rep. Ed Diehl (R-Stayton). They plan to gather approximately 78,000 valid signatures through a grassroots coalition and fundraising effort, though they must wait until Governor Kotek signs the bill before officially filing the petition and beginning collection.
Under Oregon’s Initiative and Referendum Manual, citizens have 90 days from the Legislature’s adjournment sine die to collect signatures for a referendum, not from the date the governor signs the bill.
Governor Kotek, however, has 30 days to sign or veto legislation, and as of this week, she has not signed HB 3991.
That means the clock to gather roughly 78,000 valid signatures began when the Legislature adjourned, but the bill cannot even be circulated until it becomes an “act.” This occurs only after the governor signs it or allows it to take effect without her signature.
In practical terms, every day the governor delays signing shrinks the time available for Oregonians to challenge the law. Referendum organizers say this structure was intentional, making it nearly impossible to repeal the measure before it takes effect.
“This is a deliberate squeeze,” one political observer noted, referring to the timing overlap between adjournment and gubernatorial approval. “They ran the bill through a special session, gave the governor a month to sit on it, and left petitioners racing against a clock that was already ticking.”
Oregonians who wish to request a petition or help gather signatures can visit https://notaxor.com/ to get involved in the referendum campaign.
A Special Session With Special Timing
Governor Kotek called the special session in late August to address what she described as ODOT’s “maintenance and operations funding crisis,” warning of potential service cuts if the agency did not receive new revenue.
Critics question whether the “crisis” justified a special session that bypassed the regular legislative process, which provides more opportunity for public input and oversight.
By advancing a bill that raises billions in new taxes with limited testimony, and by allowing the referendum window to overlap with her 30-day signing period, opponents say the administration effectively designed the process to insulate HB 3991 from voter accountability.
The Human Cost Behind the Numbers
For Oregonians living paycheck to paycheck, the new taxes are not an abstract policy change; they are a monthly deduction from an already stretched budget.
-
A two-car household driving 25,000 miles per year will pay roughly $150 to $200 more in fuel taxes annually, plus higher registration and payroll deductions.
-
A small trucking business could face thousands in new costs per vehicle by 2029 when diesel taxation and weight-mile changes take full effect.
In rural counties like Yamhill, where residents rely on long commutes to Salem or Portland for work, the impact is even greater.
“It’s another cost of living increase at a time when Oregon families can least afford it,” one local business owner said. “We keep hearing that it’s for road maintenance, but what we really see is government maintenance, maintaining the size of the bureaucracy.”
Paying More and Getting Less Time
HB 3991 promises smoother highways and stronger state finances, but it comes with a heavy economic toll and a shrinking democratic window for dissent.
If Governor Kotek signs the bill on the final day of her 30-day allowance, referendum organizers will have barely 60 days left to gather signatures statewide.
In a state that prides itself on citizen lawmaking, many view that as less than fair play.
The debate over HB 3991 may soon move from the Legislature’s marble halls to Oregon’s street corners, where voters, already weary of high prices, will decide whether they can afford one more tax hike and whether they will have enough time to say so.
Photo Credit: Yamhill County News
Leave a Reply