WASHINGTON – The House Ways and Means Committee on Friday released its proposed consumer tax credits in the $ 3.5 trillion budget reconciliation bill that would support affordable electric vehicles, domestic battery production and union jobs.
The legislative proposal of the commission – led by US Representative Dan Kildee, D-Mich. – would increase electric vehicle tax credits for consumers to $ 12,500 for electric vehicles assembled by union workers with domestically made batteries.
The fully refundable credit would be transferable at the point of sale and would gradually disappear over 10 years.
In the first five years, the base credit would be $ 7,500 – the maximum tax credit currently available – with an additional bonus credit of $ 4,500 for vehicles manufactured at a plant represented by one union and another. $ 500 bonus if the automaker has a nationwide supply of batteries.
During the second five-year period, only electric vehicles assembled in the United States are eligible for the base credit of $ 7,500.
The proposal – which goes through committee markup next week before being considered by the entire House – would also set a cap on the manufacturer’s suggested retail price of electric vehicles eligible for the credit.
Electric sedans must retail for $ 55,000 or less. For vans, the limit is $ 64,000; SUV, $ 69,000; and pickup trucks, $ 74,000.
The bill would also have an adjusted gross income cap for qualifying electric vehicle buyers. Based on IRS filing status, there would be an annual adjusted gross income cap of $ 400,000 for individuals; a limit of $ 600,000 for heads of households; and a limit of $ 800,000 for joint filers.
“Basically, the purpose behind this is to support… and to align with President Biden’s commitment that this plan will not raise taxes for anyone who earns $ 400,000 or less,” Kildee said. Automotive News during a telephone interview on Friday. “This includes the loss of tax benefits for the purchase of electric vehicles. Thus, anyone earning less than $ 400,000 would still be eligible for the tax benefits associated with the purchase of an electric vehicle. However, it is our intention that this tax credit will not be used by high net worth individuals to purchase luxury vehicles. “
In addition, during the first two years of the credit, electric vehicles with batteries rated at less than 40 kilowatt hours will only receive a base credit of $ 4,000 instead of $ 7,500. In years three to five, the batteries should have a minimum of 10 kWh.
“We think this is very much in line with the president’s goal of getting us to the point where half of all new vehicles sold in the United States will be electric vehicles within a decade,” Kildee said. “Once we get to this point, we don’t think the credits will be needed anymore. We believe that the scale and pricing will be such that the market will be fully able to integrate electric vehicles without any additional consumer credit support. “
The committee’s proposal comes after groups representing major automakers and other electric vehicle stakeholders urged Congress to support “broader” tax credits for battery-electric vehicles and battery-powered vehicles. fuel in the $ 3.5 trillion budget plan, called the Build Back Better Act.