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EV tax credit increase to $12,500 makes the cut in Biden's Build Back Better framework

The White House says it has reached a deal with Democrats on the multitrillion-dollar plan, and EV tax credit boosts are part of it.

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The tax credits are nearing a major overhaul.

Ford

It sounds like President Joe Biden and congressional Democrats have a deal on the president's multitrillion-dollar social spending bill, now known as the Build Back Better framework. The nearly $2 trillion in spending includes a much-talked-about boost for the electric vehicle tax credit from $7,500 to $12,500.

On Thursday, the White House announced dollar figures and initiatives included in a package that "can pass both houses of Congress," it said. Specifically for the EV tax credits, the long-floated $12,500 for purchasing an electric vehicle is included as part of $555 billion earmarked to combat climate change. According to the White House, eligible EVs will need to be made in the US with union labor to qualify for the full $12,500 credit

Existing requirements for this boost from the current $7,500 credit for qualifying EVs breaks down in a few ways: The base credit is still $7,500, but an additional $2,500 comes into play if an automaker builds the EV in America. The government would green light the remaining $2,500 if the car in question comes from a factory with a union workforce.

There may also be a separate few hundreds' worth of the credit included from using US-sourced batteries and materials for the EV, but additional details about the overall credit's provisions aren't yet available.

The initial announcement underscores this premise: "The framework's electric vehicle tax credit will lower the cost of an electric vehicle that is made in America with American materials and union labor by $12,500 for a middle-class family."

Now, Build Back Better will guide an actual piece of legislation as Democrats in the House and Senate develop the bill through the budget reconciliation process. It should, barring any bumps in the road, also pave the way for Biden's bipartisan infrastructure bill to pass both chambers.

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Watch this: How Biden's 'Buy American' initiative plans to 'build back better'
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Sean Szymkowski
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.
Sean Szymkowski
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.

Updated Oct. 28, 2021 7:29 a.m. PT

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Written by  Sean Szymkowski
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sean-szymkowski-headshot
Sean Szymkowski
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.
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