Donald Trump plans to take a sledgehammer to the $7,500 federal tax credit for electric car purchases. What does that mean for you? Well, if you’ve been hemming and hawing about buying a new electric or plug-in hybrid vehicle, you’d be wise to act fast.
“With tax credits unfortunately on the chopping block there may not be a better time to buy or lease a new EV than right now,” Chris Harto, senior policy analyst at Consumer Reports, told InsideEVs in an email. Reuters on Thursday reported that the Trump transition team wants to get rid of the longstanding subsidy to pay for tax cuts.
To be sure, the EV tax credit won’t disappear tomorrow. Trump doesn’t assume office until January. And he can’t do this alone; he’d need Congress to delete the credit as part of a wider tax bill. Those negotiations could stretch out for months.
But if you want to get ahead of any policy changes, it’d wouldn’t be a bad idea to move on a purchase sooner rather than later. The credit still very much exists right now, and updates to the provision as part of the 2022 Inflation Reduction Act (IRA) make it quick and easy to claim.
Buyers can now cash in the credit as an upfront discount at the dealership, rather than wait for a refund at tax time. If you and the vehicle you’re buying qualify for the credit (see the requirements here) you can get up to $7,500 off right away. That may provide some peace of mind for anybody who’s worried about whether the policy will still be on the books in six months or a year.
Photo by: Victoria Scott / Motor1
The Rivian R1S is one of the electric vehicles that qualifies for a federal tax credit.
One particularly hot deal to jump on, if you’re open to suggestions, is the Chevrolet Equinox EV. Factoring in the subsidy, the crossover starts at around $27,500 and delivers a healthy 319 miles of EPA-rated range. In all, 21 EV and plug-in hybrid models qualify for a partial or full tax credit right now.
But you still may be wondering: Could Congress retroactively change the tax code to screw me over later? Congress does have “some ability to amend tax laws retroactively, and even to impose retroactive taxes,” says Martin Lockman, a fellow at Columbia University’s Sabin Center for Climate Change Law. But that’s uncommon, and he’s not aware of any attempts to claw back benefits that have already been issued.
Besides being looked down upon by courts, that kind of move would be a “political nightmare,” he said.
There’s a lot we don’t know about Trump’s plans or how they will play out. It’s not clear whether he also intends to attack the $4,000 used-EV tax credit and the commercial vehicle credit, which subsidizes EV leases. The credits could all remain intact, but with lower values. We just don’t know yet.
Furthermore, it’s not even a sure thing that he’ll be successful in this at all. Enormous investments in EV and battery manufacturing are underway in red and purple states, and lawmakers may hesitate to kneecap demand for cars their own constituents build.
In that way, the IRA is a lot like the Affordable Care Act, or Obamacare, said Ingrid Malmgren, senior policy director at the EV advocacy organization Plug In America. Despite Republicans vowing for years to repeal it, it’s still on the books to this day because it’s cemented itself in American life.
All U.S. Electric Vehicles And Hybirds Eligible For Tax Credit At Purchase
- Acura ZDX
- Audi Q5 PHEV
- Cadillac Lyriq
- Chevrolet Blazer EV
- Chevrolet Bolt EV/EUV
- Chevrolet Equinox EV
- Chevrolet Silverado EV
- Chrysler Pacifica PHEV
- Ford Escape PHEV
- Ford F-150 Lightning
- Honda Prologue
- Jeep Grand Cherokee 4xe
- Jeep Wrangler 4xe
- Lincoln Corsair PHEV
- Nissan Leaf/Leaf Plus
- Rivian R1S
- Rivian R1T
- Tesla Model 3 (Long Range, Performance)
- Tesla Model X
- Tesla Model Y
- Volkswagen ID.4 (S, Pro, Standard)
Note: All EVs are eligible for $7,500 credit when leased. Check FuelEconomy.gov for exact details on models listed above. The tax credit for purchasing is capped at $80,000 or $55,000 for most vehicles. Some may only qualify for a partial credit for $3,750.
“There’s been a lot of complaining about it,” Malmgren said. “But who’s going to be the one to tell the American people that all of a sudden they aren’t protected if they have a preexisting condition?”
Still, she “absolutely” recommends that EV-curious shoppers move ahead with a purchase or lease quickly given the uncertainty around the future of EV incentives.
The potential demise of the EV tax credit is just one reason why it’s a great time to buy an EV. New restrictions around Chinese content in eligible EVs go into effect on January 1, which may boot some models from the list. And automakers are offering great deals to sell off an oversupply of EVs. As they rightsize supply with demand, prices will go up, said Ivan Drury, director of insights at the car-buying website Edmunds.
“Now, with production cuts shrinking supply and a fresh wave of demand from those seeking a deal while they still can, it can be all but assured that the price for that EV you’ve been eyeing is going up in the coming months,” he said in a statement.
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