New Bill Could Bring Tax Credit For Used Electric Cars

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【Summary】A new bill called the Affordable EVs for Working Families Act would create a new federal tax rebate of up to $2,500 for used electric vehicles.

Original Vineeth Joel Patel    Aug 08, 2021 7:15 AM PT
New Bill Could Bring Tax Credit For Used Electric Cars

The government is in limbo when it comes to making changes to the current federal tax credit amount of $7,500 and increasing the current cap of 200,000 electric vehicles sold for automakers. While things seem to happening at a snail's pace, some legislators are looking to help make electric vehicles more mainstream. Instead of focusing on new electric cars, which tend to be insanely expensive, there's a new government push to give consumers an incentive to purchase a used EV.

New Rebate For Used EVs Possible

Earlier this month, Rep. Jimmy Gomez and Sen. Dianne Feinstein — both Democrats from California — introduced a new piece of legislation that would provide shoppers with a federal tax credit of up to $2,500 off their purchase of a used electric vehicle. The bill is called the Affordable EVs for Working Families Act.

One of the major issues with electric vehicles is how much they cost. EVs are far more expensive than their counterparts with an internal combustion engine, which makes them outs of reach for the majority of consumers. While $2,500 isn't nearly as large as the $7,500 federal tax credit for a new EV, it's more than nothing. Since the majority of used car shoppers are likely to purchase a more affordable EV than shoppers looking for a new model, the $2,500 tax credit could go a long way.

"This bill would help make electric cars affordable to a larger group of people and move us closer to a point where high-pollution gas-powered cars are off the roads. We need more legislation like this to incentivize behavior that will reduce global warming, and I'm proud to sponsor this bill," said Feinstein.

Helping Families Make The Switch

Gomez pointed out that electric vehicles require less maintenance and cost less to fuel than vehicles with an internal combustion engine. So, this could give families in need of help a more affordable way to get around. "With an electric car in the driveway, working families will be able to save money on gas and maintenance costs while prioritizing the safety and security of our planet. Through my bill, the Affordable EVs for Working Families Act, we have a historic opportunity to establish a first-of-its-kind tax credit for buyers of used plug-in electric cars to make them more affordable and expand access to millions of Americans."

Currently, the bill would phase out the available tax credit for car shoppers that earn over $75,000 per year and file taxes individually. For couples, the figure goes up to $150,000 for those that file jointly. Used electric cars must cost less than $25,000 and be at least two years old. Unfortunately, there aren't a lot of options on the used market that fit the bill. Electric cars are relatively new vehicles, so finding a used option under $25,000 is difficult. We could see this bill becoming helpful in the future, when prices for EVs come down. Consumers might be able to find a used Kia Soul EV, Chevrolet Bolt EV, Chevrolet Spark EV, and Nissan Leaf under the current requirements.

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