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There has been some discussion about the $4,000 tax credit for the purchase of an electric vehicle. But there are also some limits to this credit, including the vehicles that can be eligible. This article will explore those restrictions. And we’ll talk about the limits of the credit for plug-in electric vehicles. Hopefully, this information will be helpful. But if you’re unsure, read on. You’ll be glad you did.
$4,000 tax credit for purchase of used electric vehicle
A compromise spending bill backed by West Virginia Sen. Joe Manchin, D-WV, includes a $4,000 tax credit for used electric vehicles. The deal also makes it easier for consumers to purchase electric vehicles, because the credit is applied to new and used cars, rather than the former, which is only available to those who buy a new vehicle. Both new and used electric vehicles feature in the revived tax credit proposals, and they could boost the use of alternative fuel vehicles.
The Senate’s bill also makes changes to the tax credit, including a $55,000 MSRP cap on “other” vehicles. These vehicles are classified as “other” by the EPA, but it’s not clear whether these include crossovers and station wagons. The EPA has not yet defined which cars qualify for the tax credit, but vehicles like the Cadillac LYRIQ would be categorized under “other.”
The Senate deal also contains a provision that eliminates the requirement for EVs to be assembled in the United States. This is a political change that encourages American consumers to buy EVs manufactured in the US. Only GM and Ford have collective bargaining agreements with American workers, and Stellantis, a foreign automaker, is excluded. In addition, EVs that are assembled in non-union factories will not qualify for the bonus amount.
Limitation on vehicles eligible for credit
There is a limit to the number of vehicles that are eligible for the federal tax credit for EVs. This credit is available to manufacturers for the first 200,000 models built. Once they reach this number, the tax credit begins to sunset. Once 200,000 vehicles have been built, the tax credit decreases to half. It will expire a year after that. Currently, Tesla has exhausted the tax credit.
While Toyota is next in line, the 2020 Nissan Leaf will still qualify for the full credit. But Toyotas are expected to lose their tax credits this fall. Ford and GM have petitioned lawmakers to lift the restriction, while Stellantis is urging lawmakers to extend the sunset date. EV manufacturers are struggling with rising costs and supply chain disruptions. A new bill by the White House aims to accelerate the transition to EVs by making them affordable for consumers and businesses alike.
As of the time of the introduction of this new tax credit, only 200,000 plug-in EVs will be eligible for the credit. However, the number of plug-in electric vehicles sold in the U.S. is still far higher than the number of vehicles eligible for the credit. The earlier proposal also increased the manufacturer’s sunset total to 600,000, which would bring GM and Tesla back into qualifying territory. Another proposal included a $2,500 incentive for used EV purchases. The credit would be applied at the point of sale, not waiting until next tax season to see if the car will qualify for the credit.
Limitation on plug-in electric vehicles
A new bill in the US Senate limits the federal tax credit for plug-in electric vehicles (EVs). The credit is based on the size of the battery in an EV and would be valid for the first 200,000 models from a single automaker. Republican Senator Deb Fischer introduced the amendment, which would limit the credit to taxpayers with an adjusted gross income below $100,000. However, the bill’s other limitations are still problematic.
One amendment to the bill limits the federal tax credit for EVs to those under the $48,000 threshold. That threshold means that models like the Hyundai Ioniq Electric, Hyundai Kona EV, Mini Cooper SE, Nissan Leaf S Plus, and a new Chevrolet Bolt EV are eligible for the credit. The change will phase out the credit for EVs after 2019, but it may help other EV models that fall under this threshold.
Other amendments to the bill have also limited the use of plug-in electric vehicles. One of the biggest changes is the repeal of the requirement that cars with plug-in electric drive motors be sold in certain states. This is a significant change, since it could make it harder for manufacturers to make the switch to plug-in electric vehicles. But the Senate deal is not yet final. It will be up to Congress to ratify the bill.