The House on Friday approved a compromise spending bill that devotes more than $360 billion to climate change efforts, and consumers for the first time will have a tax incentive to use toward previously owned zero-emission electric vehicles. The Senate gave its OK on Sunday, and the measure is expected to get signed into law quickly by President Joe Biden.
Related: Here’s how the Inflation Reduction Act’s rebates and tax credits for heat pumps and solar can lower your energy bill These incentives could drive up interest in brands such as Tesla
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and other automakers assembling in the U.S. that turn out alternatives to gas engines. But consumers will have to balance excitement over these purchase sweeteners — a conditional $4,000 tax credit for used EVs and $7,500 for new ones — against scarce inventory and vital semiconductor chip shortages. Cars, trucks and SUVs, especially EVs, are now much less mechanical and more digital. The spending bill is much more modest than the $3.5 trillion version Democrats originally put forward. But it restores some of the sustainable energy, EV and broader environmental efforts that featured prominently in early versions, It also comes at a time when Americans, and many around the world, are struggling with high inflation, recession jitters and volatile energy prices
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The used-EV tax credit is worth either $4,000 or 30% of the auto’s price, whichever is less. And the price cap of qualifying vehicles is $25,000. According to Cox Automotive, the average price of a used EV in the U.S. is $25,500, about right at the purchase-price limit for filing for the EV used taxed credit. Remember, that’s the average. Lower-cost EVs exist. The credits come with income caps as well: Individual tax filers must have income below $75,000 to be eligible for the credit. That cap is $150,000 for joint filers and $112,500 for heads of household. Read: Used EVs: How to navigate the tight market for pre-owned electric vehicles like the Nissan Leaf and Chevy Volt Tax breaks for buying new EVs have some requirements. New EVs will need to be built with minerals — such as high-demand lithium and cobalt — that are extracted or processed in a country …