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Make Vroom For The Electric Vehicle Tax Credit

  • Clean Energy for America Bill to provide an increased tax credit for electric vehicle purchases
  • Will disagreement in Senate prevent the bill from passing?

At the end of May, the Senate Finance Committee advanced legislation that would expand the current electric vehicle (EV) tax credits to as much as $12,500. This boost would come from the Clean Energy for America Act, which would also offer tax incentives for the domestic production of clean transportations fuels at least 25% cleaner than average.

Current EV Tax Credit

The current EV tax credit maxes out at $7,500 with no maximum retail price purchase, meaning that any EV purchased can qualify, regardless of the price. However, the credit does phase-out for purchases from automobile manufacturers that have sold over 200,000 electric vehicles. 

Current legislation is limiting and excludes a majority of the EV industry, by phasing out purchases from the largest electric vehicle manufacturers, like General Motors and Tesla.

Proposed EV Tax Credit 

The newly proposed changes to the EV tax credit would eliminate the current 200,000 sales cap. Instead, the credit would phase out once 50% of US passenger vehicle sales are EVs—a milestone expected to be well into the 2030s by most estimates.

Also, a retail price max of $80,000 would be installed, disqualifying any EV purchases over that threshold.


  1. EV purchase must be under the $80,000 price cap
  2. The credit amount is dependent upon how and where the EV is manufactured. 
    • $2,500 boost to the $7,500 credit for vehicles assembled in the US. 
    • $2,500 additional credit for cars produced at facilities whose production workers are members of or represented by a labor union.

In addition to tax breaks for EV consumers, the bill also looks to help those producing them. A proposed 30% tax credit would be offered to manufacturers to overhaul or build new facilities geared towards producing advanced energy technologies.


The Clean Energy for America Act has advanced to a 14-14 tie vote, with pushback primarily from Republicans. Senator John Cornyn (R-TX) has voiced his thoughts on the bill’s disfavoring of those with jobs in the oil and gas sector: “This is an ideological jihad against the status quo… where many jobs in our country depend on the oil and gas sector.”

On the other hand, Democrats, like Michigan Senator Debbie Stabenow, hope the credit will provide greater incentive to purchase an electric vehicle, therefore increasing the supply needed: “…it is clear that electric vehicles are a major part of our transportation future. The question is not whether they will be built. It’s where they will be built—Asia or America.” 

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