Republican leaders in the U.S. Senate have revealed their own proposed tax overhaul that preserves the electric vehicle tax credit. The Senate take on tax policy is a reversal from the U.S. House of Representatives plan, which cuts the EV tax credit.
Currently buyers of qualifying plug-in and battery-electric vehicles are eligible for a $7,500 federal tax credit for their purchase. The credit is often seen as a major attraction to drawing buyers to alternative energy vehicles, while automakers often claim the tax credit is still imperative to increasing adoption of these vehicles and subsidizing their high cost.
After news broke that the U.S. House plan eliminated the tax credit, automakers and utility companies began to lobby against the move. It isn’t clear if their mobilization ultimately swayed Senate Republicans to leave the tax credit in their proposal.
Regardless of changes to it, the full tax credit is only offered on the first 200,000 qualifying vehicles an automaker sells. After the 200,000, the amount of the tax credit recedes until it ultimately becomes zero.