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Senate GOP tax bill keeps $7,500 EV tax credit intact

It's still an important tool in spurring EV sales, and it's far from a permanent thing anyhow.


When US House Republicans unveiled their new tax reform bill, many in the auto industry were quick to freak out about the disappearance of the $7,500 electric-vehicle tax credit. Apparently, the Senate listened.

The US Senate tax reform bill has the $7,500 EV tax credit intact, Reuters reports. The move likely comes amid a great deal of backlash the first bill suffered, due in part to the perceived importance of the credit as the EV market in the States slowly grows.

Tesla's estimated to have used up half of its initial credit allotment, so don't wait too long to pull the trigger if you're on the fence.


That isn't to say that the EV credit, as it's currently designed, is permanent. Each automaker can give out up to 200,000 credits. At that point, it begins a phase-out process, where the credit is halved for two fiscal quarters, then halved again for another two before finally disappearing altogether. No automaker has achieved sales in that quantity just yet, not even Tesla.

It also bears noting that the $7,500 credit is not a pile of cash handed to you at the dealership. It's a dollar-for-dollar reduction of your tax liability for that year. If you didn't pay $7,500 in taxes that year, you'll only be credited for as much tax as you paid. Not everyone will be eligible for the full credit.

Automakers and industry groups alike hemmed and hawed at the idea of losing EV sales as a result of a disappearing credit. Even though some people view the tax credit as yet another benefit for rich buyers of $100,000 Teslas, it's still an equally important credit for families picking up a Nissan Leaf or Chevrolet Bolt.

This doesn't mean the EV credit will survive tax reform. If both houses of Congress pass their respective bills, the two must be merged and once again voted upon, and it's possible that the EV credit could die during that portion of the legislative process.