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U.S. Democrats Propose Expanded EV Tax Credits To $12,500 To Favor Big 3

The tax credit would favor American-built, union-made vehicles.

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On Friday, United States Democratic lawmakers officially proposed a significant expansion of the current electric vehicle tax credits that would highly favor union-made vehicles that produce zero-emissions and are assembled in America. Important to note is the fact that this doesn’t involve a reduction in tax credits for other, non-American vehicles.

The current tax credit for all zero-emission vehicles is $7,500, and that will remain unchanged. American, union-made vehicles, however, will garner a $12,500 tax credit.


This is all part of President Joe Biden’s seemingly lofty goal to ensure the that half of EV sales in the US by 2030 will be American-made vehicles. With this proposal, America could also see more critical union-based jobs being introduced in order to revitalize the Big Three automakers’ positions.

There are a few other things that this proposal does — and doesn’t — include:

  • The bill does away with the phasing out of automakers’ tax credits after they sell 200,000 electric models. That would make Tesla and General Motors once again eligible for tax credits.
  • Used electric vehicles will include a $2,500 tax credit, which is only eligible for vehicles older than two years and less expensive than $25,000, as long as your single income is $75,000 or family income is $150,000.
  • There’s a $4,000 base amount tax credit for all EVs. You’ll get an additional $3,500 off if the EV has a battery of at least 40kWh. There’s another $4,500 if the final assembly occurs at a domestic, unionized plant, and $500 if at least 50% of components and battery cells are manufactured in the US.
  • The tax credit has income restrictions. If you make $400,000 as a single person or $800,000 in a relationship, you’ll be ineligible for the discount.
  • There are also restrictions on the MSRPs of vehicles. Anything more expensive than the following will be ineligible: $55,000 for sedans, $64,000 for vans, $69,000 for SUVs, and $74,000 for pickups.
  • Funds will be appropriated for charging infrastructure so long as that infrastructure is available to the public, capable of charging vehicles made by more than one manufacturer, and can be paid for via credit card.
  • The bill would take effect in 2022.

Of course, it’s important to remember that these are tax credits, not immediate discounts at the point of sale. So, you’ll still be paying the original price for your electric vehicle when you buy it and will have to wait for a tax rebate during tax season.


It’s also important to note that this is just a proposal and is still subject to legislative criticism.