REAL ESTATE INSIGHTS
Harris Real Estate Daily
By Tim & Julie Harris · December 5, 2025
California agents and brokers are already navigating one of the most complex real estate environments in the country. Now, there’s a new regulatory shift you absolutely must understand—especially if you work with buyers considering new construction.
There’s a growing rumor that California has quietly passed a “6-cent per-mile road tax” that gets rolled into the price of new homes. The truth is more nuanced, but the impact is very real.
Let’s break it down clearly.
🧩 What Really Passed: AB 130 and VMT Fees
California’s AB 130, signed in late 2025, allows cities and counties to impose Vehicle Miles Traveled (VMT) transportation-impact fees on new housing developments.
Here’s the simple explanation:
New homes = more people
More people = more driving
More driving = more “impact”
Under AB 130, cities can now charge builders fees based on that projected driving
Builders pass that cost to the final homebuyer
These fees are not statewide, not uniform, and not a formal “tax per mile”—but they operate like a per-mile tax inside the development approval process.
And most importantly:
This does NOT replace the gas tax or any existing transportation tax.
It is entirely additional.
🛢️ What Taxes Are Already Being Collected?
Before VMT fees even enter the conversation, Californians are already paying:
60+ cents per gallon in state gas excise taxes
Sales tax on gasoline
Federal excise tax
State transportation improvement fees
Vehicle registration fees
Local road district add-ons
Special transportation assessments depending on the county
None of this goes away.
The new VMT fees are layered on top.
💰 How High Are These New Fees?
There is no statewide formula.
Each jurisdiction builds its own model.
But early projections show:
$20,000–$40,000 per home for moderate-impact suburban developments
$100,000–$300,000+ per home for high-impact outer-ring developments
Minimal to zero fees for dense urban infill or transit-adjacent projects
Some planning offices estimate impacts in “per-mile equivalents,” which is where the “~6 cents per mile” number started circulating.
It’s not an official rate, but the math works out that way in several jurisdictions.
🏡 Why This Matters for Agents and Buyers
These new fees directly influence:
✔ The price of new homes
✔ Where developers choose to build
✔ How many new projects pencil out
✔ Your buyer conversations in 2026 and beyond
✔ The future supply of new inventory
✔ Demand pressure on existing resale homes
California already suffers from chronic underbuilding. Additional costs do not help.
👇 What Agents Should Tell Clients
Here’s the clear, scripted message:
“California now allows cities to charge transportation-impact fees based on how much driving a new development will create. Builders must pay these fees upfront, and the cost gets added to the price of the home. This doesn’t replace the gas tax—it’s in addition to the taxes Californians already pay.”
Clients appreciate clarity without fear-mongering.
Agents who understand the policy will stand out.
📍 Who Will Feel This the Most?
Most Affected:
Suburban new construction
Rural-edge subdivisions
Master-planned communities far from job centers
Any project in a city implementing aggressive VMT formulas
Least Affected:
ADUs
Urban infill
Transit-oriented development
High-density housing
Expect builders to shift their strategies accordingly.
📉 Will This Slow New Construction?
Nearly every analyst says yes.
When development costs rise:
Fewer projects are financially viable
Builders cut back or postpone plans
Lenders hesitate to finance marginal sites
Homebuyers face higher new-home prices
Resale inventory becomes even more competitive
This will place upward pressure on resale prices—especially in suburban markets.
🧭 The Bottom Line for 2026–2030
California’s new VMT fee authority:
Adds new costs on top of existing taxes
Raises the price of new construction homes
Reduces feasibility in car-dependent areas
Tightens inventory supply
Pushes more buyers into the resale market
Creates confusion that you can now clarify for your clients
This is one of those policy shifts that quietly reshapes a market for years.
Agents who understand it will be miles ahead of those who don’t.
— Tim Harris
Tim and Julie Harris Real Estate Coaching
📬 Interested in Elite Coaching? Text Tim directly at 512-758-0206