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The U.S. Senate Finance Committee advanced legislation to increase EV tax credits to as much as $12,500 for EVs assembled by union workers in the US.

The bill would limit tax credits to vehicles priced below $80,000 to qualify.


WASHINGTON (Reuters) - The U.S. Senate Finance Committee advanced legislation on Wednesday that would boost electric vehicle tax credits to as much as $12,500 for EVs that are assembled by union workers in the United States.

The bill would limit tax credits to vehicles with a retail price below $80,000 to qualify for the tax credits. The current maximum tax credit is $7,500 with no maximum price and currently phases out for individual automakers once they hit 200,000 total EVs sold.

Both General Motors and Tesla have hit the cap and currently do not qualify for the $7,500 tax credit.

The “Clean Energy for America” bill, which advanced on a 14-14 tie vote, would eliminate the existing EV cap, while the credit would phase-out over three years once 50% of U.S. passenger vehicle sales were EVs. It has numerous other green energy tax incentives and would rescind or cut many fossil fuel tax provisions.

The EV proposal led by Senator Debbie Stabenow, a Michigan Democrat, would boost the $7,500 tax credit by $2,500 for vehicles assembled in the United States and another $2,500 for cars at facilities whose production workers are members of, or represented by, a labor union.

That would mean smaller credits to automakers such as Tesla, Volkswagen and others who do not have U.S. union workers, and companies building EVs outside the United States.

The EV incentives are estimated to cost $31.6 billion through 2031, according to a congressional estimate. The bill must still be approved by the full Senate and U.S. House of Representatives.

The bill also includes a 30% tax credit for manufacturers to retool or build new facilities to produce advanced energy technologies including batteries and new incentives to purchase commercial electric vehicles.

President Joe Biden has proposed $174 billion for electric-vehicles and charging stations, including $100 billion for consumer rebates. Last week at a Ford Motor factory in Michigan, Biden ruled out consumer incentives for high-priced electric luxury models and urged automakers not to build EVs abroad for U.S. consumers.

United Auto Workers President Rory Gamble praised the legislation for ensuring “EV production will directly create the good paying union jobs of the future President Biden has championed.”

Stabenow said a century ago as automakers were debating between electric and gasoline-powered vehicles Congress provided tax incentives for the oil industry.

“We picked a winner and they won - 100 years ago,” Stabenow said “And now we’re just trying to level the playing field.”

Republicans said Democrats were using the tax code to devastate the oil and gas industry. They also cited reports that children are involved in some countries in the mining of minerals for EV batteries.

“This is a frontal assault on my state,” said Republican Senator John Cornyn of Texas. “This is an ideological jihad against the status quo... where many jobs in our country depend on the oil and gas sector.”
 

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I see a lot of people commenting on this one but ultimately it just doesn't really matter to me that much. Since the credit is non-refundable, it requires that I have a liability. I am not sure how 2022 will shake out for me since I've changed jobs at the start of 2021 and increased my salary, but with the tax changes made in late 2019 I found that my 2020 taxes were pretty spot on. I owed a very very small amount, hardly worth worrying over compared to my overall income. To be fair, I'm not planning on making any investment changes this year and that is the one place where I could see myself massively upping my tax liability.

I figure the same is the most likely result for next year as well, in which case a tax credit does me virtually no good.

Are the majority of you actually able to take advantage of these types of credits? Maybe I'm just doing life wrong 😆
 

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I see a lot of people commenting on this one but ultimately it just doesn't really matter to me that much. Since the credit is non-refundable, it requires that I have a liability. I am not sure how 2022 will shake out for me since I've changed jobs at the start of 2021 and increased my salary, but with the tax changes made in late 2019 I found that my 2020 taxes were pretty spot on. I owed a very very small amount, hardly worth worrying over compared to my overall income. To be fair, I'm not planning on making any investment changes this year and that is the one place where I could see myself massively upping my tax liability.

I figure the same is the most likely result for next year as well, in which case a tax credit does me virtually no good.

Are the majority of you actually able to take advantage of these types of credits? Maybe I'm just doing life wrong 😆
It would be very uncommon for a non-retired person who can afford a Rivian to not be able to take advantage of the full credit. The credit gets applied against your "Tax" (1040 line 16 in 2020). Non-refundable can still reduce your tax to $0 and cause 100% of your withholdings to be refunded to you; it just can't cause more than you had withheld to be paid to you. Whatever value you have on line 22 (this line is tax less credits) is money you could have added to your refund if you had non-refundable credits to claim.
 

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I'm 30 years away from retirement and had I bought this last year it would have saved me 700$ in taxes. I guess I'm a pretty uncommon person 🤷
I think you’re confusing “liability” with amount owed. If you had taxes withheld from your paycheck, and didn’t get all of that back when you filed at the end of the year, then you had a liability. Look at line 24 on your 1040. If that is greater than $0, then you had a liability.
 

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"The bill would limit tax credits to vehicles with a retail price below $80,000 to qualify for the tax credits. The current maximum tax credit is $7,500 with no maximum price and currently phases out for individual automakers once they hit 200,000 total EVs sold. "
I generally don't approve of tax credits meant to subsidize personal choices whether it's having children, taking out a mortgage or in this case purchasing a particular type of vehicle assembled by the "right" kind of workers. That said, if I have to pay taxes and fund programs I don't agree with then I will sure as Hell take the deductions I don't agree with either. Now we just need that $80k retail limit to go away and I will take the reduction in my tax liability for the R1T Adventure with the max battery I have on reserve.
 

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Thank you @Wildabeest and @timesinks for the explanation. I clearly didn't understand how it worked and am glad I do now. It is a shame that what I have specced well exceeds an 80k cap. I hope there is some workaround but I'm fortunate enough to be able to prioritize what I want out of the vehicle over how much it costs.

I think if they want to base a tax credit cap on something reflecting an affluence cutoff, they should base it on the income of the buyer, not the cost of the vehicle. For those who have saved wisely and don't have huge incomes, that $7500 means even more to them than those with higher incomes.
 

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There are a couple of different bills floating around, this is one of them, there was also one that makes the EV tax credit more like the Solar tax credit where you can roll it over if you can't use it all. That would help a lot of people with lower tax liabilities take advantage of the break.

Hard to say what if any of these will get passed and what year they will take effect. The 80K limit was also a late add, hard to say if it will stay or not.
 

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It would be very uncommon for a non-retired person who can afford a Rivian to not be able to take advantage of the full credit. The credit gets applied against your "Tax" (1040 line 16 in 2020). Non-refundable can still reduce your tax to $0 and cause 100% of your withholdings to be refunded to you; it just can't cause more than you had withheld to be paid to you. Whatever value you have on line 22 (this line is tax fewer credits) is money you could have added to your refund if you had non-refundable credits to claim.
The comment above is spot on. Also, You have to understand a tax credit. Once you have earned that credit and applied, it won't expire and doesn't have to be used in that single year. You can use what you need and the balance the following year.
 

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The comment above is spot on. Also, You have to understand a tax credit. Once you have earned that credit and applied, it won't expire and doesn't have to be used in that single year. You can use what you need and the balance the following year.
This is not true of the EV tax credit. Unless they make a change to the current bill the EV tax credit is a non-refundable tax credit, any unused portion is lost. The tax credit for Solar is also a non-refundable tax credit but there is an exception that allows you to roll unused amount to the next year.

There are challenges to that if you do EV and Solar in the same year as you have to apply the Solar credit first and then can apply the EV credit to what is left of your liability so it almost makes more sense to do them in separate years unless you have a high tax liability that can consume both credits.
 

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This is a great idea, but I would rather see them do a #$3,000 tax credit for 3-4 years regardless of price. Do that for the next 10 years and EV adoption will be amazing, you can then kill off the credits.
 

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is the $80,000 limit applying to the base price? or fully optioned?

If the former, it calls for me to keep the base options like wheels and then buy after market.
This is a proposed bill, nothing signed yet so the details of what is in the final version (if it ever makes it there) and what the time frames for implementation will not be known at this point.
 

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The U.S. Senate Finance Committee advanced legislation to increase EV tax credits to as much as $12,500 for EVs assembled by union workers in the US.

The bill would limit tax credits to vehicles priced below $80,000 to qualify.


WASHINGTON (Reuters) - The U.S. Senate Finance Committee advanced legislation on Wednesday that would boost electric vehicle tax credits to as much as $12,500 for EVs that are assembled by union workers in the United States.

The bill would limit tax credits to vehicles with a retail price below $80,000 to qualify for the tax credits. The current maximum tax credit is $7,500 with no maximum price and currently phases out for individual automakers once they hit 200,000 total EVs sold.

Both General Motors and Tesla have hit the cap and currently do not qualify for the $7,500 tax credit.

The “Clean Energy for America” bill, which advanced on a 14-14 tie vote, would eliminate the existing EV cap, while the credit would phase-out over three years once 50% of U.S. passenger vehicle sales were EVs. It has numerous other green energy tax incentives and would rescind or cut many fossil fuel tax provisions.

The EV proposal led by Senator Debbie Stabenow, a Michigan Democrat, would boost the $7,500 tax credit by $2,500 for vehicles assembled in the United States and another $2,500 for cars at facilities whose production workers are members of, or represented by, a labor union.

That would mean smaller credits to automakers such as Tesla, Volkswagen and others who do not have U.S. union workers, and companies building EVs outside the United States.

The EV incentives are estimated to cost $31.6 billion through 2031, according to a congressional estimate. The bill must still be approved by the full Senate and U.S. House of Representatives.

The bill also includes a 30% tax credit for manufacturers to retool or build new facilities to produce advanced energy technologies including batteries and new incentives to purchase commercial electric vehicles.

President Joe Biden has proposed $174 billion for electric-vehicles and charging stations, including $100 billion for consumer rebates. Last week at a Ford Motor factory in Michigan, Biden ruled out consumer incentives for high-priced electric luxury models and urged automakers not to build EVs abroad for U.S. consumers.

United Auto Workers President Rory Gamble praised the legislation for ensuring “EV production will directly create the good paying union jobs of the future President Biden has championed.”

Stabenow said a century ago as automakers were debating between electric and gasoline-powered vehicles Congress provided tax incentives for the oil industry.

“We picked a winner and they won - 100 years ago,” Stabenow said “And now we’re just trying to level the playing field.”

Republicans said Democrats were using the tax code to devastate the oil and gas industry. They also cited reports that children are involved in some countries in the mining of minerals for EV batteries.

“This is a frontal assault on my state,” said Republican Senator John Cornyn of Texas. “This is an ideological jihad against the status quo... where many jobs in our country depend on the oil and gas sector.”
I believe that Rivian does not hire union workers. So, I believe we are still at $7,500 for our tax credit which is still great!
 

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If it passes as written besides the 7500, there is 2500 if assembled in the US and another 2500 if by union workers so a Rivian would be eligible for 10k
The part that disappoints me is there is no way to get the Max pack with the Adventure trim and qualify for the tax credit.

So now the Max pack has a real-world cost of $20,000 since you pay Rivian an extra $10k and you lose the $10k credit.
 

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The part that disappoints me is there is no way to get the Max pack with the Adventure trim and qualify for the tax credit.

So now the Max pack has a real-world cost of $20,000 since you pay Rivian an extra $10k and you lose the $10k credit.
That is true. It will be interesting to see what ends up in the final bill if it passes. The 80k limit was a late add, it could get removed.

Curious what the implementation time frame would be as well. I would think this would be next year as many people bought EVs this year already, can’t really change the rules for them.
 
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