Until we know if the Build Back Better bill passes both chambers, this is the best case scenario, actually. What if I owe money at tax time when claiming the credit? The change would move the tax credit much closer to a point-of-sale incentive, and with the right qualifying EV, buyers could receive a max of $12,500 back from the government for buying a battery-powered car. With this change, it wouldn't matter if an EV buyer owes the feds or not - anyone who buys an EV will be potentially eligible for at least $4,000 in their pocket. However, the latest version of the Build Back Better bill with new House language turns the EV tax credit into a refundable one. That means that the government does not cut you a check for $7,500 - all it does right now is reduce your federal tax bill. Is the EV tax credit refundable or nonrefundable?Ĭurrently, the tax credit is a nonrefundable credit when you file your taxes. Democrats in the chamber hope to reach a deal by Christmas. However, it now heads to the Senate, where it would need to pass before any of this becomes law.
19 with all of these EV tax credit changes. Following the bipartisan infrastructure package's passage, the House turned its attention to the Build Back Better bill. The president is keen to incentivize EV purchases, and this push comes as part of a proposed $555 billion investment into actions to combat climate change. The dollar figures are down sharply from $400,000 for single filers and $800,000 for joint filers.
Single filers with adjusted gross annual incomes of $250,000 or more, or joint filers with AGIs of $500,000, will not be eligible for the full credit.
The Democrats also reduced income eligibility to claim the full credit. Previously, the initial framework set a limit of $64,000 for vans, $69,000 for SUVs and $74,000 for pickup trucks. The new language allows for vans, trucks and SUVs with a manufacturer's suggested retail price of up to $80,000 to qualify for the $12,500 credit. In other changes made last week in the House, Democrats increased the price cap for qualifying EVs. This provision would, notably, exclude Tesla and even the Ford Mustang Mach-E, since it's assembled in Mexico. Today, the only car that would qualify for anywhere near the full proposed credit is the Chevrolet Bolt EV and Bolt EUV. Another $500 comes into play for automakers using a US-made battery, for a maximum of $12,500 available. EVs and consumers will be able to qualify for another $4,500 in the tax credit if an automaker makes the EV in the US with a union workforce. This is for cars placed in service before 2027. In the case of plug-in hybrids, the gas tank cannot exceed 2.5 gallons.
The base amount remains $4,000, as it is today, with another $3,500 available if the EV's battery pack includes at least 40 kilowatt-hours of capacity. Here's how the proposed changes shake out, and keep in mind, they may change yet. Its inclusion comes as the bill sheds multiple other elements to compromise with various Democrats. The Build Back Better bill includes a $12,500 EV tax credit, up from the current $7,500 available to qualifying cars and buyers. Is the EV tax credit amount increasing?Īs of Nov. Read on for the latest on the tax credit and where things stand in the legislation today. It's a huge shift away from the current nonrefundable amount. With it passed in the House, it now heads to the Senate, where a refundable EV tax credit up of up $12,500 hangs in the balance. The US House made some huge changes to incentivize electric vehicle purchases as part of President Biden's Build Back Better bill. How does $8,000 back on your taxes for buying a Tesla sound? It could happen.