House GOP tax bill could make EVs more expensive in a hurry
The bill contains a proposal to do away with a key $7,500 federal tax credit.
Right now, buyers of electrified vehicles might be eligible for up to $7,500 in federal tax credits. But that could change -- and fast -- if a new tax bill becomes law.
A new bill proposed by House Republicans could eliminate the federal electric tax credit without any sort of drawdown period, Bloomberg reports. While the credits won't disappear tomorrow, they might be eliminated after the 2017 tax year if this bill becomes law.
If the tax credit goes away, you can say goodbye to the notion of picking up a new Bolt EV or Model 3 for less than $30,000.
Currently, if you buy an electrified vehicle, you're eligible for up to $7,500 in tax credits. Once an automaker hands out 200,000 of these credits, a phase-out process begins, where the tax credit is halved for two fiscal quarters, then halved again for another two, then it finally disappears. No automaker has reached the 200,000-credit mark yet.
It's important to note that this credit isn't a line item deduction on the car's price tag, but rather a dollar-for-dollar reduction of your tax liability for that year.
To date, the tax credit has been an important component of the push to get the public in EVs. While buyers of $100,000 Tesla Model X SUVs may not need the credit, buyers of more affordable cars such as the Chevrolet Bolt EV, Tesla Model 3 and Nissan Leaf might have more of an interest in keeping costs down. Removing the tax credit could make those "cheaper" EVs a little harder to swallow.
GM appears to think the same thing. "Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles," said Elizabeth Winter, a GM spokeswoman, in a statement. "Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive." Tesla did not immediately return a request for comment.
Of course, this all hangs on the notion that the House GOP bill will pass its half of the legislature, also make it through the Senate and eventually land on the president's desk. The Senate is currently working on its own version of a tax reform bill, and it's unclear if EV tax credits are on the chopping block on the other side of the Capitol.
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