Senators Propose Killing EV Credits

This is the fifth in a series of articles for clients to keep them updated on the thinking on Capitol Hill on proposed tax changes so they can plan appropriately. This delves into a pair of Senate bills that would kill electric vehicle (EV) credits.

Article Highlights:

• Electric (ELITE) Vehicles Act
• $7,500 and $4,000 EV Tax Credits
• Electric Vehicles (Fair SHARE) Act
• One-time Tax of $1,000 on the Purchase of EVs.

Electric (ELITE) Vehicles Act - Senator John Barrasso (R-WY) has introduced the Eliminating Lavish Incentives to Electric (ELITE) Vehicles Act (Senate Bill 541), a piece of proposed legislation aimed at terminating the $7,500 tax credit for new EVs and $4,000 credit for used ones. Additionally, the act seeks to abolish the federal investment tax credit for those constructing EV charging stations.

The legislation is supported by Senate Majority Leader John Thune and 13 other Republican senators. It has also garnered backing from groups such as the American Fuel & Petrochemical Manufacturers, the National Taxpayers Union, and Americans for Prosperity.

Electric Vehicles (Fair SHARE) Act - Senator Deb Fischer (R-NE) has introduced a legislative proposal called the Fair Sharing of Highways and Roads for Electric Vehicles (Fair SHARE) Act. This bill aims to require electric vehicle (EV) owners to contribute to the Highway Trust Fund (HTF), which is crucial for funding the maintenance of roads and bridges, and that is currently funded primarily by a federal tax on gasoline and diesel fuel. It proposes a one-time tax of $1,000 on the purchase of EVs.

Currently, EV owners do not pay into the HTF because they do not pay the federal gasoline tax that supports this fund.

According to Senator Fischer: "EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges." "It's only fair that they pay into the Highway Trust Fund just like [owners of] other cars do.” Hybrid vehicles would be exempt from the new tax.

The bill has co-sponsors including Senators Cynthia Lummis (R-WY) and Pete Ricketts (R-NE) as well as support from various trade associations, such as the American Society of Civil Engineers, American Road and Transportation Builders Association, and the American Trucking Association, among others.

Alert: The EV credits would end for vehicles purchased 30 days after the bill is signed into law by President Trump, while the $1,000 tax would be effective for sales after December 31, 2025.

We will have wait and see how these bills play out in Congress.

Stay Tuned!