Sadly, it can’t all be good news this month. On capitol hill, the Tax Cuts and Jobs Act threatens to immediately repeal the $7,500 tax credit that has been instrumental in driving EV sales so far. While drivers are learning the benefits of electrification, such as lower maintenance costs and instant torque, tax credits still help bring down the cost of plug-in electric vehicles closer to that of traditional cars. As explained by Green Car Reports, EV sales in Georgia tanked after the state ended its $5,000 tax credit, so tax credits have some serious utility.
The current federal tax credit works like this: EV buyers can reduce income taxes by $2,500 to $7,500, depending on the battery size of the EV they purchase. This opportunity lasts for the first 200,000 EVs sold by an automaker in the U.S., and afterwards, it reduces to a half rate for six months and a quarter rate for another six months. Repealing the tax credit would complicate finances and swell expenses for hundreds of thousands of potential EV purchases in the coming years.
While the electrified revolution is coming, full EV adoption is not yet here. The majority of the cars on the road are still powered by gasoline, and charging stations are outnumbered by gas stations. Until EVs come closer to market saturation, boosts like the EV tax credit are a huge help. Things aren’t all doom and gloom, though. The bill is still in an early stage in the House, and it has a long way to go before it will work its way through both chambers of Congress. The Tax Cuts and Jobs Act may never reach the president’s desk, and if it does, the provision that repeals the EV tax credit may not be there anymore.
However, if we want the provision gone, we need to take action. We encourage everyone to write or call their representatives and insist that the EV tax credit is good for the state of Michigan, as well and the economy and environment of the entire country. You can find your representative here: https://www.house.gov/representatives/find/