$7500 U.S. Tax Credit may go away

[DACSarasota]

https://electrek.co/2021/08/11/us-senate-40000-limit-price-electric-cars-ev-tax-credit/

https://arstechnica.com/cars/2021/08/senate-votes-to-restrict-ev-tax-credits-despite-climate-crisis/

Let's hope this doesn't pass!

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[atebit]

…or at least doesn’t take effect until say, 2030.

 

[Torv]

It’s a non-binding resolution, so I’m not particularly concerned. That said, there is a disparity between the tax credit and people of mid to low income ability’s to take advantage of it and really make it economical for them to adopt EVs and therefore reduce greenhouse gases.

 

[DerekS]

This can't take effect for 2021 tax year, can it?

 

[themickd]

That said, there is a disparity between the tax credit and people of mid to low income ability’s to take advantage of it and really make it economical for them to adopt EVs and therefore reduce greenhouse gases.

I agree with you sentiment. Should I get a $7,500 credit on a $150,000 car? Probably not. But I bought it believing I was going to, so that would be a bit of a kick to the nuts in 2021.

 

[DerekS]

I agree with you sentiment. Should I get a $7,500 credit on a $150,000 car? Probably not. But I bought it believing I was going to, so that would be a bit of a kick to the nuts in 2021.

That's what I'm saying, they can't change the rules midway into the tax year right? Changes have to apply to TY2022+?

 

[Torv]

I agree with you sentiment. Should I get a $7,500 credit on a $150,000 car? Probably not. But I bought it believing I was going to, so that would be a bit of a kick to the nuts in 2021.

Agreed! Me too.

 

[XLR82XS]

That's what I'm saying, they can't change the rules midway into the tax year right? Changes have to apply to TY2022+?

I'm no CPA but I would say you're correct.

 

[cfp]

I'm no CPA but I would say you're correct.

It's very rare for Congress to implement a retroactive tax hike. Not sure how you'd qualify this but it sorta fits the bill. Plus, the House still would have to agree to this. Dems don't want to see this change.

 

[PDACPA]

Biden signed a retroactive tax law this past March 12 (half way into tax preparation season) that impacted 2020 tax returns (first $10,200 of unemployment benefits were not taxable). The IRS had to go back and issue refunds to already filed tax return.

That was obviously beneficial for taxpayers, but more than likely, the EV credit would not impact 2021. However, there are probably a number of buyers who ordered expecting to take delivery before the end of 2021 and those are being pushed off to 2022 who would be impacted, if it passed.

 

[cfp]

Biden signed a retroactive tax law this past March 12 (half way into tax preparation season) that impacted 2020 tax returns (first $10,200 of unemployment benefits were not taxable). The IRS had to go back and issue refunds to already filed tax return.

That was obviously beneficial for taxpayers, but more than likely, the EV credit would not impact 2021. However, there are probably a number of buyers who ordered expecting to take delivery before the end of 2021 and those are being pushed off to 2022 who would be impacted, if it passed.

yes, they do retroactive beneficial tax changes rather frequently.

 

[LonePalmBJ]

https://electrek.co/2021/08/11/us-senate-40000-limit-price-electric-cars-ev-tax-credit/

https://arstechnica.com/cars/2021/08/senate-votes-to-restrict-ev-tax-credits-despite-climate-crisis/

Let's hope this doesn't pass!

The title of this thread seems unnecessarily alarming to me. As a non-binding amendment to legislation that hasn't even been drafted, and is all but certain to proceed along a majority-party budget reconciliation process, this is merely political theater. It makes for good headlines, fundraising, and campaign talking points but the likelihood of this tax code revision being actually enacted as part of the larger infrastructure plan seems vanishingly small to me.

 

[Wakesurfer]

I'm no CPA but I would say you're correct.

I am not a CPA either, but a quick search of the internet will reveal that in fact the tax code has changed mid-stream/mid-year and in some litigated cases those changes were retro-active. Not saying that it will happen with the $7,500 credit (we will have to see the final wording in the actual bill) but like just like a bonus.....................don't spend the money until you have cashed the check.

 

[hkarthik]

The title of this thread seems unnecessarily alarming to me. As a non-binding amendment to legislation that hasn't even been drafted, and is all but certain to proceed along a majority-party budget reconciliation process, this is merely political theater. It makes for good headlines, fundraising, and campaign talking points but the likelihood of this tax code revision being actually enacted as part of the larger infrastructure plan seems vanishingly small to me.

While I generally agree with you, there is a reason to raise awareness of what's on the table in bills regarding EVs while we can. Senators will change their mind if enough of their constituents and donors make a big fuss about an amendment.

 

[whitex]

It's a non-binding resolution but it could be just politicians wanting to effectively remove the EV incentive without looking like they did so. They do that by making sure there are not a lot of people who could use the EV tax credit. Typical politics. Imagine for example, "$20K EV federal tax credit for anyone in the bottom 50% income in the USA " - sounds great, right? Well, given that ~47% of people in the USA don't pay any federal income tax (they do pay other taxes of course, but not federal income tax for which EV credit is for), that means such a grand $20K EV credit would actually be an empty gesture because nobody in the bottom 47% could get anything and the remaining 3% would get very little (none of them pay $20K in federal income tax). This would be similar to an executive order Biden issued to convert the entire federal government vehicle fleet to EV's, except if you read the fine print, the conditions imposed on the EV's are such that the car simply does not exist today, or in the near future - looks great to the voters, costs nothing, changes almost nothing.

EV's are a new technology and are still more expensive than ICE cars. People who say "if you can afford a $100K car, you don't need a tax credit" are short sighted. Someone has to buy those cars to drive the industry growth. $7,500 from the government vs. $100K from a buyer, the buyer seems to be taking most of the risk on the new technology if the car depreciates quickly because newer, higher range, more features, cheaper EV's come to the market. They also become used cars at some point, at a lower price. And yes, even if you can afford a $100K car, a tax credit could be a deciding factor whether or not you will pay the premium to go EV or stay with ICE cars you have known for a long time. I know for me personally the tax incentives were a very big factor to switch to EV's.

I think the biggest problem with the government cannot agree on what they are trying to achieve. If the goal is to get more EV's on the streets, then who cares if it's a billionaire buying a thousand of them, it's a thousand more EV's on the road. Perhaps the goal is to get more inexpensive EV's on the road, sure, then limit the car price to which it applies, maybe even give higher incentives to lower priced cars, but again, it should have nothing to do with the buyer income. Note however that limiting the qualifying price of the car also potentially limits the innovation in EV's as it will cause many manufacturers to just focus on price reductions, rather than increasing battery capacities, etc. Bottom line, state your goal clearly, and measure your progress against that goal. If the EV incentive is meant to get more EVs on the road, don't muddy the waters by attaching riders that it should also solve homelessness, or help some minority groups. Create separate programs for that. Unless of course the goal is in fact to not be able to measure/achieve success of government incentives, than by all means, add "solve world hunger" and "achieve world piece" in the EV incentive goals too.

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