Once upon a time, there was a federal tax credit of $ 7,500 for Teslas and General Motors electric cars. But since both automakers passed 200,000 EV sales in 2019 and 2020, respectively, that credit has gone. However, it could return thanks to a new bill.
Democratic leaders of the US House Ways and Means Subcommittee have adopted the Now Growing Renewable Energy and Efficiency (GREEN) Act, introduced by Representative Mike Thompson (D-Calif.), making Tesla and GM vehicles eligible for IRS tax credits again, and for years to come.
In essence, the bill would allow customers to claim up to $ 7,000 in credit when purchasing a new electric car – a reduction of $ 500 from the previous credit. That would now take until the automaker in question has more than 600,000 electric vehicles sold. More importantly for Tesla and GM, the law would also roll back their amounts to 200,000, meaning any cars sold by both companies after their initial 200,000 would not count towards their 600,000 total.
As with the current U.S. Clean Energy and Security Act (ACES) Act, credits would be awarded on a sliding scale based on technology – full electric vehicles would get more than plug-in hybrids, for example. In addition, once a manufacturer sells 600,000 eligible cars, its prospective customers can only claim up to $ 3,500 in credit for the next quarter. After that, the savings would be completely eliminated.
The proposal also provides for the sale of second-hand electric vehicles. Buyers could save up to $ 2,500 as long as the car in question is two or more years old and the retail price is less than $ 25,000. However, the suitability in buying used is tied to the income and the limit is very low, like Title IV of the Bill states (in bold by me):
The amount that … would be allowed as credit under Subsection (a) will be reduced (but not below zero) by $ 250 for every $ 1,000 (or portion thereof) with which the the taxpayer’s adjusted gross income exceeds $ 30,000 (twice as much in the case of a joint return)
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Of course we have heard about the The Biden government’s desire to push electric vehicles since the election, and reintroducing credits could help get more of those cars out on the streets. Or notas there is some evidence that most people who buy electric vehicles are wealthy enough to do so regardless of whether they qualify for a tax subsidy.
An effective Using EV credit, on the other hand, would provide the twofold benefit of encouraging those existing cars stay on the road while lowering prices for those who can’t afford new electric vehicles – the people who could use the subsidies the most. However, those income requirements could really use a different look. I would like to know how many people are making less than $ 30,000 a year modifications, have ever even considered used EVs.
It’s worth noting that an earlier version of the GREEN Act did not pass in the summer, although now with a small democratic majority it is more likely to blossom this time.