Congress actually got something done this fall. They passed the Inflation Reduction Act!
Scaled back from the original $3.5 trillion Build Back Better Plan, a revised $700 billion spending package was signed into law in August. A huge win for Democrats ahead of the midterm elections, the Inflation Reduction Act is a win for us, too – but also only scrapes the surface of what we need.
A few highlights of the Inflation Reduction Act include:
This all sounds great, but wait a minute…
You see, there’s this thing that politicians do sometimes that really pisses me off and it’s when they package something up to sound awesome, but it’s really a bunch of bullsh*t behind the scenes.
We all know that we should be driving electric vehicles to save the Earth, right? But since it’s expensive to replace your car, the government wants to incentivize you to do it by giving you a tax credit.
The tax credit itself has been around for a bit – up to $7,500 on the first 200,000 cars sold by each brand.
The Inflation Reduction Act changes the rules a bit.
So, where’s the problem?
Well… as much as I’m all about buying American, that’s not exactly possible in the EV market (yet). Most of the parts for our EVs still come from China and Russia, and we just don’t have the infrastructure yet to make entire EVs here in the states.
Which means that very few cars (if any) currently qualify for this new tax credit.
The second issue is with the price caps and the income limitations. Now I’m normally fine not giving wealthy people a tax break, but here is one time where I’m actually going to advocate for it (I know… but stick with me for a second).
You know the worst offenders on the road right now? Those massive Suburbans, Tahoes and other massive people movers. And you know who owns the majority of those massive people movers? People who can afford to have lots of people (i.e., kids) and who tend to be on the wealthier side.
So, when you put a cap on the price of SUVs and the income limits of the taxpayers that qualify for the credit, you’re effectively eliminating the only options those massive-people-mover owners would consider. Would I love for them to trade in their Escalade for a compact, reasonably priced EV SUV? Sure, but it’s not gonna happen.
This is the one instance where I’m willing to trade equity in tax laws for saving our planet. Because we are literally running out of time.
Do these new limitations mean that you shouldn’t sign up for a brand-new EV?
Not at all. But check with your dealer and your tax accountant to make sure the car you’re considering gets you the incentives you want.
Want to see if the car you’ve been eyeing qualifies? Use this site (but note – it’s still in the process of being updated for the new law).