Democratic climate plan adds tax breaks for electric vehicles up to $ 80,000

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Democratic MPs on Wednesday presented a revised a social spending and climate clause that increases the electric vehicle tax credit to $ 12,500 for more expensive vehicles and offers lower income for eligible buyers.

Under the House of Representatives update, vans, SUVs and trucks worth up to $ 80,000 are eligible for a full tax credit. The previous bill limited loans for vans worth $ 64,000, SUVs worth $ 69,000, and trucks worth $ 74,000.

The proposal also limits the full tax credit for individual taxpayers reporting modified adjusted gross income to $ 250,000 or $ 500,000 for joint reporting. The previous plan set limits at $ 400,000 for individual applications and $ 800,000 for joint applications.

The transportation sector is one of the largest sources of greenhouse gas emissions in the United States, accounting for about one third of its annual emissions. The shift from gas-powered vehicles to electric vehicles and trucks will be critical to tackling climate change.

The Democrats’ proposal includes a $ 4,500 tax credit on the purchase of an electric vehicle from a unionized plant. This provision will be of particular benefit to automakers such as General Motors and Ford, whose production workers are represented by the United Auto Workers.

Learn more about electric vehicles from CNBC Pro

Republicans have opposed tax breaks for the purchase of union-produced electric vehicles.

The amended legislation, which is part of President Joe Biden’s $ 1.75 trillion social and climate spending package, will give a major boost to the electric vehicle market. Electric vehicle sales are expected to account for less than 4% of US sales this year, according to industry analysts.

Democrats are seeking to close negotiations on the President’s Build Back Better plan this week. In the coming days, the House of Representatives may vote on the bill.

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