Electric vehicle buyers or EV buyers may get up to $12,500 incentive as President Joe Biden's Build Back Better bill is now in the hands of the Senate after it passed the House last month.
The $12,500 is a refundable tax credit for those who will switch their traditional vehicles into electric ones.
EV Tax Credit Amount
The Build Back Better bill presented by the Biden administration includes a $12,500 EV tax credit on electric vehicles and e-bikes. The rate has increased from the original tax credit of $7,500 that is available to qualified buyers and vehicles, according to CNET.
The inclusion comes as the bill removes other elements in order to compromise with the demands of House Democrats.
Basically, the base amount is still $4,000, with another $3,500 available if the electric vehicle's battery pack has 40 kilowatt-hours of capacity.
If it is a plug-in hybrid, the gas tank must not exceed 2.5 gallons. This is for vehicles that are placed in service before 2027. Then the $5,000 boost.
Consumers and electric vehicles will be able to qualify for another tax credit worth $4,500 if the automaker makes the EV in the United States with a union workforce, according to Road Show.
Another $500 will be added for automakers using the battery made in the United States, thus making the tax credit a maximum of $12,500.
Currently, the only vehicles that would qualify for the proposed credit are the Chevrolet Bolt EUV and the Chevrolet Bolt EV. The provision would exclude Ford Mustang Mach-E and Tesla from the EV tax credit since the vehicles are assembled abroad.
Last week, the House Democrats increased the price cap for qualifying electric vehicles. The new language allows for trucks, vans, and SUVs with a manufacturer's suggested retail price of $80,000 in order to qualify for the $12,500 credit. In the past, the framework set a limit of $69,000 for SUVs, a limit of $64,000 for vans, and $74,000 for pickup trucks.
The Democrats also reduce the income eligibility of the buyer so they can claim the full tax credit. Single filers with an adjusted gross annual income of $250,000 or joint filers with an annual gross income of $500,00 will not be eligible for the tax credit.
President Biden wants to encourage the purchase of eletric vehicles. This plan is a part of the proposed $555 billion investment into actions to combat the problem with climate change.
After the bipartisan infrastructure package passage, the House shifted its attention to the Build Back Better bill.
The House passed the bill on Nov. 19 with all of the changes. It is now forwarded to the Senate, where it would need to pass before it becomes a law, according to CNBC.
Is the EV Tax Credit Nonrefundable?
Currently, the tax credit is nonrefundable while buyers file their taxes. That means that the government does not give you a check for $7,500. It will just reduce your federal tax bill.
However, the last version of the bill turns the EV tax credit into a refundable one. That means those who buy an EV will be eligible for at least $4,000.
This article is owned by Tech Times
Written by Sophie Webster
