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Tuesday, May 24, 2022

EV Tax Credits: Bill Of $12,500 Passed

On the 19th of November, the US House passed the Build Back Better bill of President Biden, which also included EV Tax Credits. After going through huge changes to better incentivize the purchases of electric cars, the government would be pushing for this refundable credit of about $12,500- a major shift away from the latest non-refundable amount. Now, with the bill heading towards the Senate, it would be prudent to keep an eye on where it needs to pass before the change turns official.

Will EV tax credits amount increase?

With the bill getting passed on the 19th of November, the answer for this should be yes. The Build Back Better bill would also include EV tax credits of $12,500- up from the current sum of $7,500 available to qualifying buyers and cars. The inclusion would be needed since the bill would shed multiple other elements designed to compromise with the several Democrats in Congress.

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The base amount would remain as $4,000- with around $3,500 available if the battery pack of the EV would include close to 40 kilowatt-hours of capacity. With respect to plug-in hybrids, the gas tank wouldn’t be capable of going beyond 2.5 gallons. This is specifically for cars that have been placed in service before 2027. 

After this, the boost of $5,000 would be applied to EV tax credits. Most consumers and EVs will be eligible for qualification for a payment of $4,500 in the tax credit if an automaker brings out the EV in the US with a union workforce. A separate payment of $500 would also factor into play for most of the automakers using a battery made in the United States- for a maximum of $12,500. Currently, the only vehicle that would find themselves eligible for the proposed credit is the Chevrolet Bolt EV. 

Currently, EV tax credits are a nonrefundable credit when you end up filing for your taxes. This implies that the government wouldn’t cut you a check of $7,500.

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