Electric Vehicle Tax Credit Survives Termination

By: Ryan Gallagher December 22, 2017
After initial threats, the electric vehicle tax credit survived the final version of GOP tax bill this month.

Electric vehicle (EV) buyers hoping to receive a new car with a tax rebate for Christmas can now rest easy—EV tax incentives are here to stay.

The Tax Cuts and Jobs Act—otherwise known as the Republican tax bill—will in fact retain the electric vehicle tax credit. The news comes after there were serious doubts for the rebate’s safety when House Republicans removed the EV credit from their version of the tax reform bill.

On December 15, Senators Bob Corker (R-TN) and Marco Rubio (R-FL) agreed to the final version of the $1.5 billion tax reform bill, keeping the EV customer benefit. With the credit—Section 30D of the Internal Revenue Code—remaining intact, EV buyers can receive up to $7,500 back when buying a low- or zero-emissions vehicle.

However, the rebate won’t last forever—it only applies to each carmaker’s first 200,000 EV buyers before entering a phase-out period. After the initial tax credits are dispensed, the dollar amount each buyer receives is cut in half every six months until the rebate is gone. Automobile manufacturers like Tesla and GM are already getting close to that 200,000 mark.

Despite the phase-out period looming for some car manufacturers, electric car proponents were quite content with the decision to keep the EV tax rebate.

“We are extremely pleased that members of the conference left in place the consumer credit for plug-in electric vehicles,” said Genevieve Cullen, president of the Electric Drive Transportation Association. “This credit supports innovation and job creation while helping drivers access advanced vehicle technology. Keeping the plug-in vehicle credit in place is the right policy for consumers and for the nation.”

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