Proposed EV Tax Credits Could Change the Motoring Landscape
Newly proposed EV tax credits continue to undergo changes as lawmakers prepare to roll them out.
Big Changes
The current $7,500 EV tax credit has been around for quite some time now, but lawmakers have been working to revise EV incentives in the past several months. What the final product will look like is currently unclear, but President Joe Biden's Build Back Better bill recently underwent more changes that aim to turn a newly proposed EV tax credit into a refundable credit, which could have large implications for those in the market for a new vehicle.
Photo: Ford
Opening Up
Previously, the newly proposed EV tax credits were nonrefundable, but lawmakers recently changed the language of the bill to make them refundable, meaning that any EV buyer can get that money back on their taxes - not just people who have tax liabilities. This is an important distinction, as it opens up the credit to far more people than the current $7,500 tax credit.
Photo: Chevrolet
Current Situation
Currently, the EV tax credit essentially only wipes away money owed to the government, meaning that if you owe $10,000 in taxes, using it will reduce that liability to $2,500. But if the liability is less than $7,500, it simply reduces one's tax bill to $0, with no money coming back to the buyer.
Photo: Tesla
Money Back
With the newly proposed legislation, buyers will get that money back, no matter what. If you owe $5,000, you'll get $2,500 back, for example, and if you owe nothing, you'll get the full $7,500 back. Another big change is the fact that the new bill opens up this credit to all automakers for five years, including Tesla and GM, which had previously exhausted their eligibility under the existing tax credit.
Photo: Audi
Few Caveats
However, there are a few important caveats, starting with the fact that after the first five years, the credit only applies to US-made EVs. Union-built EVs are good for as much as $12,500 - an extra $4,500 for U.S.-based assembly of union-built vehicles, and $500 if they use a U.S.-built battery. This has been a big point of contention for Tesla fans, as that automaker is not unionized and therefore would not be eligible for the extra $4,500 for that simple fact alone.
Photo: Ford
Changing the Landscape
Regardless, the fact that EV buyers could be eligible to get as much as $12,500 back on their taxes is huge news for everyone, and a major incentive to go out and buy an EV. This proposed bill has the potential to truly change the landscape of motoring as we know it, and convince a lot of customers who are on the fence to go electric.
Photo: Tesla
Up for Debate
Of course, lawmakers are still debating the finer details of this bill, and it could change a little or a lot by the time it passes, if it's passes. But we'll certainly be keeping a close eye on the bill's progression and reporting back on any potential changes as they happen.
Photo: General Motors
