AB 130 Links Driving Miles to Housing Costs, Stirring

The Vehicle Miles Traveled (VMT) housing tax is shaping up to be one of California’s more controversial policy experiments. It blends two very different tools—road-use fees and housing regulations—into a system that could hit both developers and renters in the wallet.

Since 2020, state law has required cities and developers to measure the VMT impact of new housing or commercial projects under the California Environmental Quality Act (CEQA). Instead of looking solely at congestion, planners now ask whether a project will cause people to drive more miles. A suburban subdivision far from jobs, schools, or transit usually scores high on VMT, while apartments built near transit in Los Angeles or San Francisco score low.

Under Assembly Bill 130, passed in 2025, cities and regional agencies may now charge fees or taxes tied directly to VMT levels. For example, if a developer proposes 200 homes in a car-dependent area, the city could calculate that residents will generate 4,000 extra miles per household each year. The developer may then be required to pay a “VMT mitigation fee,” with the cost often passed to buyers and renters. The money is supposed to fund projects like bus lines, bike lanes, or affordable housing near jobs.

Because developers in high-VMT areas would pay more, their projects inevitably become more expensive. Those costs are rarely absorbed by builders and almost always trickle down to consumers. Critics say this is why the policy amounts to a “housing tax.” It doesn’t charge drivers at the pump or through odometer checks—it targets new housing projects based on where people will drive.

In January 2025, Caltrans ran a voluntary VMT road-use pilot where drivers paid a flat rate of 2.8 cents per mile. AB 130 could allow similar rates to be built into housing projects, meaning that large developments might owe millions before breaking ground.

Supporters argue the program discourages sprawl and funds transportation alternatives. Opponents warn it adds yet another barrier to building housing in an already unaffordable state.