Potential Pieces of Good News for EVs Assembled in the US

[rdr854]

Based on the House Ways and Means Committee summary of "The One, Big, Beautiful Bill", it looks like there could be a few positives (assuming that the bill is signed into law without major modification), as follows:

Section 110104 - No Tax on Car Loan Interest: The proposed provision proposes "an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest during a given taxable year. The deduction phases out starting when a taxpayer's modified adjusted gross income exceeds $100,000 ($200,000 in the case of a joint return)." One of the qualifying conditions is that the vehicle's final assembly must occur in the US - which is good for both the Volvo EX90 and the Polestar 3.

Section 112002 - Termination of clean vehicle credit. This legislation proposes acceleration of the expiration from December 31, 2032, to December 31, 2025. Thus, if passed, the termination will not be sudden (like the 2022 changes) and will allow the tax credit for the remainder of the year. The provision also implements a special rule for Tax Year 2026 that will allow vehicles produced by manufacturers that have not sold 200,000 new clean vehicles as of December 31, 2025, to qualify for the credit.

Section 112003 - Termination of qualified commercial clean vehicles credit. Like the consumer credit, this legislation proposes to phase this credit out as of December 31, 2025.

Interesting stuff!!

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[Henry Ford]

Trading a $7500 discount for a tax deduction on loan interest is good news?

 

[TaxmanHog]

Supposedly, the committee was burning the Sunday midnight oil yesterday / this morning on the B.B.B.

https://www.congress.gov/event/119th-congress/house-event/118295?s=1&r=72

 

[chl]

Nothing good there for Ford Lightnings: "qualified passenger vehicle" and some of us do not itemize deductions or get low interest financing sometimes 0%.

All this so big oil can toast the planet and billionaires can get more tax breaks.

Thanks, but no thanks.

 

[TaxmanHog]

some of us do not itemize deductions or get low interest financing sometimes 0%.

This will be an "Above the line" adjustment to gross income to arrive at Adjusted gross Income.

Those who use the standard deduction will still be able to use it, but it's net value is only an effective tax rate value, ie. {$10,000 adjustment at 15% would net a tax reduction of $1500}

 

[jimfigler]

you need to itemize to get the loan interest back and who does that with high standard deduction.

 

[TaxmanHog]

 

[rdr854]

The interest deduction is better than having nothing and if your truck was above the $80K cap, it would be a gain since the BEV tax credit would not have applied in any event. It appears that the current administration wants to reward US assembled cars rather than merely BEVs.

 

[chl]

Per Plug In America: The House bill that passed "not only eliminates EV and clean energy tax credits but also adds a car tax of $250 each year for EV drivers. The bill eliminates tax credits for EVs, solar panels, and energy efficiency improvements that save Americans’ money to fund tax cuts for billionaires. "

 

[ryun]

Yeah like I don't agree with the changes to the clean vehicle tax credit expiration, but I get it. That $250 annual tax on EVs and $100 (?) on hybrids is straight ass.

Raise the tax on gas vehicles too you cowards.

 

[davehu]

Nothing good there for Ford Lightnings: "qualified passenger vehicle" and some of us do not itemize deductions or get low interest financing sometimes 0%.

All this so big oil can toast the planet and billionaires can get more tax breaks.

Thanks, but no thanks.

not just "some of us", 90% of taxpayers take the standard deduction. also of note is a $250 year tax on EV's to replace the lost gas tax revenue. (which I don't have a problem with)

 

[astrand1]

not just "some of us", 90% of taxpayers take the standard deduction. also of note is a $250 year tax on EV's to replace the lost gas tax revenue. (which I don't have a problem with)

Yeah of course I’m never a fan of more taxes but the money I save per month not buying gas the $250 is not so bad. I wonder how they would collect these funds? Would it be collected by the states then sent to the feds or would it be a line item on my tax form. I would like the latter as I usually get enough of a refund that I would not even notice the $250.

 

[RocketGhost]

not just "some of us", 90% of taxpayers take the standard deduction. also of note is a $250 year tax on EV's to replace the lost gas tax revenue. (which I don't have a problem with)

As mentioned above you can still take the interest deduction if you also take the standard deduction.

The $250 isn't too bad as long as you state doesn't also add a surcharge (see below).

Yeah of course I’m never a fan of more taxes but the money I save per month not buying gas the $250 is not so bad. I wonder how they would collect these funds? Would it be collected by the states then sent to the feds or would it be a line item on my tax form. I would like the latter as I usually get enough of a refund that I would not even notice the $250.

The problem with the $250 is that it is FAR more than the average driver pays in federal gas tax. It's approximately what the average driver pays in federal and state gas taxes. My state already adds a registration fee for EVs that covers lost state and federal gas taxes. If I get hit with both I'll be pissed. It would be double taxation and a windfall for the government.

I don't know how the feds would collect it since there's not a mechanism for them to do so currently. That's why I'm hopeful it doesn't end up passing. There would be some significant administrative costs.

 

[TaxmanHog]

I don't know how the feds would collect it since there's not a mechanism for them to do so currently.

Hold my beer................

 

[ryun]

The problem with the $250 is that it is FAR more than the average driver pays in federal gas tax. It's approximately what the average driver pays in federal and state gas taxes. My state already adds a registration fee for EVs that covers lost state and federal gas taxes. If I get hit with both I'll be pissed. It would be double taxation and a windfall for the government.

So does my state (PA). We're gonna get double taxed for sure -- just a gut feeling. My wife and I are looking at easily ~$1000 per year for two vehicles that maybe put 7500 miles on the roads per year. Not each, total. I've got no problem with paying my fair share. I really don't. My wife and I will be paying for at least 2 times our fair share per mile.

The mechanism they can likely use is have the state DOT's collect it on the Fed's behalf. PennDOT does something already for local county fees.

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