EV owners can start getting excited. The Build Back Better bill (signed by President Biden) passed the House of Representatives and is making its way to the Senate. This new EV tax credit should incentivize people to buy these climate-friendly vehicles by offering up to $12,500 in tax credits. What’s more, the bill seeks to make more people qualify by opening the credit up to used EVs as well.
It’s not official yet, but so far the main point of contention (that will be debated) is how this would impact union labor because other parts of the world supply electric vehicle parts. That said, a rising tide helps all ships, so there’s an argument to be made for and against. However something most parties seem to be in agreement on is making the “credit” refundable.
Why Now?
The EV tax credit isn’t a new idea, but it’s become a part of the build back better bill to help foster a healthier planet, better climate, and incentivize citizens to take part. Effectively, there are three parts to this change:
- Part of the bill is ensuring more people can qualify for the tax credit, this includes used EVs.
- Another element is this reinforces the $1 trillion in infrastructure going toward charging stations and a better road system for EVs — i.e. if you’re spending a trillion dollars on EV infrastructure, then people better use them.
- Making the EV tax credit refundable.
This is a step in the right direction to hit net-zero emissions by 2050. The farther EVs can go and the faster they can charge and now, the more money you can save, will go a long way to incentivize consumers and automotive dealers to buy EVs.
Is The Tax Credit Refundable?
This is the part that’s still under review, but many agree it would make the incentive that much more favorable, is making the tax credit refundable. Essentially, right now there is an EV tax credit so if you owe taxes it’ll apply towards your debt. However, if the EV tax credit becomes refundable, then if you don’t owe any taxes, the government pays you.
Used EVs Eligible for the Tax Credit?
Not yet. Part of the proposed bill is to change that however. Currently, leasing won’t qualify you for the credit. However, the new bill would open used EV purchases for the credit. If your used EV is at least 2 years old and costs under $25,000, you can qualify for $2,000 credit. For EVs with a 40 kilowatt battery, owners can receive an additional $2,000 credit.
A tax credit is one thing, but a refundable tax credit that applies to new and used EV car owners can go a long way to ensuring an emissions free environment.
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