Proposed EV tax credit cost cap gets surprise increase to $80,000 for SUVs, trucks

While President Biden's Build Back Better framework remains stalled in Congress, House Democrats revealed more updates to the plan on Wednesday, including a surprise increase in the price cap for eligible electric vehicles for the overhauled EV tax credit proposal. In the new language, SUVs, trucks and vans with a manufacturer's suggested retail price of up to $80,000 can qualify for the credits. It's a massive boost from the original framework, which capped costs at $64,000 for vans, $69,000 for SUVs and $74,000 for pickup trucks.

Meanwhile, sedans hold steady with the same proposed price cap: An electric sedan will not qualify for tax credits if the MSRP exceeds $55,000. The new credits, if Biden and Democrats finalize a deal, would jump to $12,500 maximum. To qualify, automakers must build the EV in the US with union labor for an extra $4,500 over the current $7,500 base credit. Another $500 comes from US-made batteries to power the EVs.

While the price cap for vans, SUVs and trucks increased in the latest revision, Democrats also changed brackets for who may be eligible. Those single filers with adjusted gross annual incomes of $250,000 or more won't be eligible for the full credit (or $500,000 for joint filers). This is different from the previous thresholds of $400,000 for single filers and $800,000 for joint filers.

House Democrats hoped to vote on the Build Back Better agenda this past Tuesday, though the self-imposed deadline came and went as party infighting and some senators remain holdouts on the bill. It's unclear when it may pass both chambers, but its passage holds Biden's bipartisan infrastructure bill in the balance after the legislation passed the US Senate months ago. The bill involves crucial support for automakers as it would create hundreds of thousands of new public EV charging stations among other important items.

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