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Congressman proposes raising EV federal tax credit to $10,000

Rep. Peter Welch says move would make electric vehicles more affordable to middle class.

By Douglas Newcomb May 9, 2014 8:36AM

One of the big incentives consumers have for buying an electric vehicle -- besides saving on fuel -- are the state and federal tax credits that sweeten the deal. The federal government currently offers a tax credit of up to $7,500 on the purchase of a qualifying EV. But Democratic Rep. Peter Welch of Vermont wants to increase that to $10,000.

Welch said the move would make the vehicles more affordable to middle class Americans. Another source of motivation, he says, stems from motor vehicle emissions that are the biggest contributor to greenhouse gases in his home state. And Welch added that the battery technology of zero-emission EVs has improved to the point that the vehicles are more practical, allowing people to drive longer distances without charging.

Welch said he planned to introduce the legislation as the Electric Vehicle Act when he returns to Washington, where he has an EV tax credit ally in the White House.

In its most recent budget, the White House also proposed raising the federal tax incentive for purchasing an EV from $7,500 to $10,000. But the larger tax break wouldn’t apply to vehicles with a sales price of more than $45,000. For luxury EVs such as the Tesla Model S and Cadillac ELR that are over that limit, the tax credit would be capped at $7,500.

According to Karen Glitman of the Vermont Energy Investment Corporation, a nonprofit consulting group that promotes efficient energy, the number of EVs sold in Vermont has tripled within a year and the state currently has close to 650 registered plug-ins. Although that's a small number, she added that the potential tax savings for Vermont car buyers could be significant enough to further spur EV sales.

Glitman also pointed out that since drivers in the state shelled out around $1.1 billion in gasoline and diesel fuel sales in 2010, the EV tax break could help residents spend more money in their own backyards. "We need to keep that money with Vermonters and keep it working in Vermont rather than sending it overseas for the most part," Glitman said.

Vermont, which in October signed a memorandum with seven other states including California to reach 3.3 million zero-emission vehicles by 2025, is under pressure to get more EVs on the road. California, Vermont and about a dozen other states have adopted emissions laws that are stricter than federal requirements. In California, the state mandate that automakers sell a certain percentage of zero-emission cars -- by 2025, it wants them to make up 15.4 percent of total sales -- is the real force behind the growing EV market.

"This is the most important piece of legislation for EVs, and will ensure a future for electric cars," Bradley Berman, editor of, told MSN Autos. "By 2040, California's goal is that every single vehicle sold will be zero emissions -- either battery electric or fuel cell electric."

But tax credits and rebates aren't the same thing. California, and soon Massachusetts, offers a $2,500 rebate for the purchase of an electric car. In Illinois, that rebate goes up to $4,000.

"What's key here is that those are rebates, a real check in the mail, rather than tax credits offered by the feds and in most states," Berman said. "Tax credits are also good but they depend on a buyer's tax liability for their value."

Colorado offers EV buyers a maximum $6,000 tax credit, Louisiana $3,000 and South Carolina $2,000. In Washington, EVs are exempt from state sales tax. Those credits, however, are only available to buyers, not lessees. Dealers usually reduce the cost in the lease by the credit's amount. For more information on state-by-state incentives, visit the Alternative Fuels Data Center from the Department of Energy.

[Source: CNBC]
May 9, 2014 9:24AM
Nope.  No tax credits should be allowed AT ALL.

If you want the car, YOU can pay the full price for it. No credits.  No Incentive deductions. Nothing.
Nada. Zilch.  Otherwise, the rest of the American taxpayers are carrying the bill for your car.

May 9, 2014 9:40AM
Zero emissions from the car but what about the emissions from the power plant that makes the electricity?
May 9, 2014 9:24AM
Yeah, Use my tax dollars to help a rich person buy a car   !!!!!!!!!!!!!!!!!!!!
How about just giving every person in the U.S. $10,000 to buy a car. !!!!!!!!!!!!!!!!

If those EV are so great, there should absolutely no need for a tax credit  !!!!!

I want a Lamborghini Gallardo  !!!!   Come on government. I'm poor and you owe me a new car !!!!

May 9, 2014 9:22AM
I love when Congressman waste my taxes. If they actually had a real interest in middle income families affording electric cars, they would have them priced in the 20- 30k range.
May 9, 2014 10:04AM
So the loss of revenue from fuel taxes and now the tax loophole pushing these cars puts an even larger impact on those who can't afford to drive their older cars in the first place, namely the working "Middle-class"!!!!
May 9, 2014 9:38AM

Where is my tax credit for driving a car that is 15 years old?


It ibecomes more environmentally friendly the older it gets vs. a new car.

May 9, 2014 9:19AM
The question remains.  What happens when the tax credit goes away? 
May 9, 2014 9:39AM
But didn't the "will of the people" elect obubu with his promise of elimination of subsides, earmarks and pork? Oh, he must have meant just the one's that he did not start!
May 9, 2014 9:40AM
Yeah, like the poor have enough tax liability to make use of a major tax credit.  This boondoggle favors wealthier people, and if the government is stupid enough to do that, then shame on them.  I know all sorts of wealthy professionals who run their own businesses who cleaned house on electric cars, which they use to drive to their summer beach houses, wrote off as business expenses and got gigundo credits for.  
May 9, 2014 9:53AM
Electric vehicles are only green if they USE SOLAR POWER to charge the batteries.  I wanted to buy a Cruz motorcycle. The place where I work would not sport for a panel array to charge the bike? 
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