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House Democrats propose up to $12,500 in electric vehicle tax incentives, despite opposition from Republicans, Tesla, and Toyota

New tax incentives for electric vehicles are included in the Democratic-controlled House Ways and Means Committee’s suggestions for the party’s $3.5 trillion spending bill, as Washington continues to press for a transition away from gasoline-powered vehicles. However, Republican lawmakers have claimed that the planned incentives will benefit rich Americans, and several automakers have objected to a special boost for Detroit’s Big Three automakers.

The current $7,500 electric vehicle tax credit, which enables taxpayers to deduct a portion of the cost of purchasing an electric vehicle, expires once an automaker sells 200,000 total electric vehicles, and both Tesla TSLA, +0.23 percent and General Motors GM, +2.26 percent have already sold over 200,000 electric vehicles.

The 200,000-unit cap would be removed under the new proposal, allowing Tesla and GM EV buyers to receive more credits.

In addition, the credit is increased by $4,500 for union-manufactured vehicles constructed in the United States, with an additional $500 for cars with a minimum of 50% domestic content and batteries made in the United States. As a result, the total credit amount might be as much as $12,500.

Other conditions state that the credits will not be given to electric vehicles whose prices surpass specific thresholds – $64,000 for vans, $55,000 for sedans, $74,000 for pickup trucks, and $69,000 for SUVs. Taxpayers who earn more than $400,000 a year are ineligible for the credit, which is capped at $600,000 for people who file as “head of household” and $800,000 for couples.  Starting in the year 2027, these incentives will only be available to automobiles manufactured in the United States.

The United Auto Workers and the Sierra Club are among those who support the Ways and Means Committee’s proposal for increased EV tax credits, as are the Big Three — Ford F, +3.48 percent, GM, and Chrysler parent Stellantis STLA, +2.28 percent.

“What do environmentalists, automakers, and employees all have in common?” They all support my plan to increase electric vehicle manufacturing in the United States to help generate good-paying employment and reduce emissions,” Democratic Representative Dan Kildee of Michigan, who is a member of the Ways and Means Committee who has advocated the EV tax credits, tweeted.

For example, U.S. representative Carol Miller of West Virginia tweeted that it’s “impossible to understand how giving a $12,500 tax relief to someone purchasing a $74,000 electric car is a way to aid working-class folks.” Georgia Republican Rep. Drew Ferguson sponsored an amendment that would have reduced the Electric Vehicle credit’s maximum earnings to $150,000 for couples and $75,000 for individuals, but it was not enacted.