Once upon a time, you could get a $ 7,500 federal tax credit on General Motors’ Tesla and electric cars. But since both automakers exceeded sales of 200,000 EVs in 2019 and 2020, respectively, that credit has disappeared. It can come back, however, thanks to a new bill.
Democratic leaders of the US House Subcommittee on Means and Means supported the Renewable Energy Cultivation and Efficiency Now Act (GREEN), presented by Representative Mike Thompson (D-Calif.) who would make Tesla and GM vehicles eligible for IRS tax credits again, and for years to come.
Basically, the account would 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. This would now last until the carmaker in question exceeds the 600,000 EVs sold. More critically for Tesla and GM, the law would also reduce its counts to 200,000, which means that any cars that both companies sold after the first 200,000 would not count towards their total 600,000 cars.
As with the current American Clean Energy and Safety Act (ACES), credits would be granted on a sliding scale based on technology – fully electric vehicles would receive more than plug-in hybrids, for example. In addition, once a manufacturer sells 600,000 qualified cars, its future customers will only be able to claim up to $ 3,500 in credit for the following quarter. After that, the economy would be eliminated completely.
The proposal also provides for sales of used EVs. Buyers could save up to $ 2,500, as long as the car in question is two or more years old and the selling price is less than $ 25,000. However, eligibility for the purchase of used vehicles is linked to income, and the limit is very low, according to Title IV of the demand states (in bold by me):
The amount that would be allowed as a credit under subsection (a) must be reduced (but not below zero) by $ 250 for every $ 1,000 (or fraction thereof) by which the The taxpayer’s adjusted gross income exceeds $ 30,000 (twice that amount in the case of a joint return).
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Of course, we have heard about the The Biden administration’s desire to push EVs since the election, and reinstating credits can help more of these cars hit the streets. Or not, whereas there is evidence to suggest that most people who buy EVs are wealthy enough to do so, regardless of eligibility for tax allowance.
An effective used EV credit, on the other hand, would offer the dual benefit of encouraging existing cars to staying on the roads while also lowering prices for those who cannot afford new EVs – people who could actually use the grants more. However, these income requirements could really look different. I would be curious to know how many people earn less than $ 30,000 a year, less adjustments, even considered EVs used.
It is worth noting that a previous iteration of the GREEN Act was not passed during the summer, although with a small Democratic majority now, there is a better chance of paying off this time.