There was once a $ 7,500 federal tax credit on Teslas and electric General Motors cars. But since both carmakers passed 200,000 EV sales in 2019 and 2020, respectively, the credit has disappeared. However, it may return thanks to a new bill.
Democratic leaders of the US House Ways and Means Subcommittee supported Growing Renewable Energy and Efficiency Act now (GREEN), instituted by Representative Mike Thompson (D-California) to re-qualify Tesla and GM’s vehicles for IRS tax credits for the next few years.
In essence, the account will allow customers to claim up to $ 7,000 in credit when purchasing a new electric car – a reduction of $ 500 compared to the previous credit. It will now take until the carmaker in question exceeds 600,000 cars sold. More critically for Tesla and GM, the law would also bring their rates back to 200,000, meaning that any cars both companies sold after their first 200,000 would not count towards their total of 600,000.
As with the current US Clean Energy and Safety Act (ACES), credits will be allocated on a sliding scale based on technology – fully electric vehicles, for example, will receive more than plug-in hybrids. Once a manufacturer sells 600,000 qualifying cars, its future customers can only claim up to $ 3,500 credit for the next quarter. After that, the savings would be completely eliminated.
The proposal also provides for used EV sales. Buyers can save up to $ 2,500 as long as the car in question is two or more years old and the selling price is below $ 25,000. However, access to the purchase of used products is linked to revenue, and the limit is very low, as Title IV of the account declared (bolded by me):
The amount that … if credit would be granted under subsection (a) is reduced (but not below zero) by $ 250 for every $ 1,000 (or a fraction thereof) that the taxpayers’ adjusted gross income exceeds $ 30,000 (twice that amount in the case of a joint return).
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Of course we have already heard of the Biden administration’s desire to push EVs since the election, and the reinstatement of credits, it could help more of the cars reach the streets. Or not, as there is evidence to suggest that most people who buy EVs are wealthy enough to do so regardless of the tax allowance.
An effective used EV credit, on the other hand, would offer the dual benefit of encouraging existing cars stay on track while also lowering prices for those who can not afford new EVs – the people who can use the subsidies the most. However, these income requirements may use a different look. I would be curious to know how many people earn less than $ 30,000 a year adjustments, even considered used EVs.
This is remarkable that an earlier repetition of the GREEN law could not succeed during the summer, but with a slim Democratic majority, there is a greater chance that it will come into its own this time.