$100K earners benefit most from electric vehicle credits
WASHINGTON — Across the country, tax breaks for owners of electric vehicles have largely gone to people with six-figure incomes.
With a dossier full of that kind of information as ammunition, powerful opponents of expanding the credit are mobilizing.
“The EV tax credit is no longer necessary,” Sen. John Barrasso, chairman of the Senate Environment and Public Works Committee, wrote earlier this month in a letter to Senate Majority Leader Mitch McConnell.
Auto industry interests and clean-energy advocates have been pressing to expand the credit that currently gives electric vehicle owners up to $7,500 per qualified vehicle, which is beginning to phase out under current law. But the mood in the U.S. Senate appears to be shifting in the opposite direction.
Sen. Chuck Grassley, the powerful chairman of the tax-writing Senate Finance Committee, “has serious concerns about expanding this existing tax credit, which primarily benefits upper-income individuals who likely can already afford electric vehicles,” spokesman Michael Zona said.
The Trump administration proposed ending the credit this year, part of its effort to end subsidies for similar items, notably renewable energy sources.
The expansion effort is being pushed by a group of House and Senate lawmakers, including some Republicans, who have long promoted clean energy, backed by environmental groups, auto industry interests and others.
A key goal is to spur production so it reaches a level where it’s more efficient and less costly to produce the vehicles.
With the credit, “we’re kind of getting to where we need to be,” Rep. Dan Kildee, a Michigan Democrat who’s helping to lead the expansion effort, told McClatchy.
He has the support of some powerful Democrats who run the House, and one of their hopes is that the credit winds up in a catch-all tax cut bill later this year.
The major federal tax break for qualified plug-in electric vehicles was first enacted in 2008. It ranges from $2,500 to $7,500 per vehicle bought after Dec. 31, 2009. It begins to phase out when at least 200,000 qualifying vehicles per manufacturer have been sold for use in the U.S.
Tesla passed the threshold last year, and since July 1, the credit on its eligible vehicles has been reduced to $1,875. Next year, no credit will be available on eligible Teslas.
Credit for buying eligible General Motors vehicles is also being phased out. In April, the Internal Revenue Service reported that GM had sold more than 200,000 total eligible vehicles during the last quarter of last year, triggering the phaseout. Since Oct. 1, the credit has been reduced to $1,875 per GM vehicle, and after March 31, 2020, no credit will be available.
The Volkswagen ID.3, which the automaker introduced at IAA 2019 in Frankfurt, is its first model on its MEB product line for electric vehicles.