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Potential EV Incentives

thrill

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One of the major criticisms of the current Tax Incentive is that it mostly benefits the wealthy...
Yeah, it's not like the wealthy pay the vast majority of taxes - why give them even a slight incentive to go green instead of buying yet another gas guzzler? /s
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Mjhirsch78

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Yeah, it's not like the wealthy pay the vast majority of taxes - why give them even a slight incentive to go green instead of buying yet another gas guzzler? /s
This is not true if you look at a percentage of dollars earned going to various taxes. Research over decades has shown that the poor pay a comparable percentage of their income to various taxes even with the lower rates due to sales taxes, payroll taxes (capped so the lower income pay this On all income compared to wealthy only paying up to that cap), and other taxes. Yes, the wealthy pay a higher absolute value, but are also benefitting greatly from their wealth. In short: Lower income folks will put any extra dollar back into the economy. Higher income folks put that into savings/stocks that serve no legitimate economic purpose if we care about keeping the economy going.

Evidence? My wife and I finally saved enough after 20 years to get a nice car and solar panels. We will not benefit from the full incentives because despite being middle class, we will not have enough federal tax debt to get the full value of both incentives. So if we were making more, we would get more out of these exact same incentives and we are by no means poor.

So wealthy folks should get some incentives, but lower income folks are much more likely to be pushed into a different decision because things go from out of reach to actual possibility.

The easiest fix was already mentioned: make the incentives either refundable, or more likely, roll over to succeeding years (this would take care of the problem of the government having to put money out and just reduce income in succeeding years).
 

EVSport7

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Still hoping for point of sale price reduction. That will really help the lower income folks since they can more easily handle smaller loans and purchase
 

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Still hoping for point of sale price reduction. That will really help the lower income folks since they can more easily handle smaller loans and purchase
EVSport7 & others,

I'm not trying to be confrontational here, I'm just trying to understand the mechanizations for how this would work. When advocating for a "point of sale price reduction", do you see it as a government-funded rebate to the buyer, or perhaps a subsidy from the government directly to the manufacturer to offset the cost of the vehicle? Would it be available only on lower MSRP vehicles or some sliding scale related to the final price of any vehicle, to avoid the Tesla loophole discussed previously?

If either of those options were used, it means these rebates/subsidies/offsets would be funded by tax-payer dollars (I know, "Thanks, Captian Obvious!"), as are the current incentives. Many have tried to explain that the current incentives aren't taxpayer-funded, but if my tax liability and subsequent payment is reduced because of an EV purchase, there's a hole in the total tax revenues that will be made up elsewhere.

Either someone else pays in the form of higher taxes, or the value of every dollar goes down as extra new money is printed to make up for the shortfall. The Federal Reserve can tell us continuously that there's no inflation on the horizon, but if you start printing new money or simply borrow more from the world to make up for budgetary shortfalls, the value of every U.S. dollar eventually will go down. Macro Econ 101.

Perhaps a combination of rebates and a version of the current incentives will foster the desired behavioral changes and help all people to afford a non-ICE vehicle while still incentivizing manufacturers to build both affordable and luxury EVs. I'd love to see Rivian and every car company, old or new, make a complete range of vehicles for a broad spectrum of uses and users. If you're a legacy automaker who got blindsided by the oil cartels in the 70's and/or needed taxpayer assistance to survive in this century, these incentives can help you survive as we transition from the ICE-age to the era of electrification.

I can already hear the boo-birds complaining about any government assistance for this industry (from outside this forum), but I'm truly just trying to understand how best to be fair to all EV buyers and manufacturers with these incentives.
 

EVSport7

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I was thinking some kind of website that the dealer or manufacturer uses where they input the VIN and purchase details and get some form of confirmation. The lower price is given to the customer, the dealer or whoever would then get a refund from the govt at some set interval.

I think it should be a flat amount or a percentage of the purchase price so people can still buy nicer cars with it. Then if something like EIC for EVs to help lower income people would help too at tax time. I'd rather just get the price of the truck reduced up front
vs waiting for a bigger refund at tax time.
 

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SANZC02

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I was thinking some kind of website that the dealer or manufacturer uses where they input the VIN and purchase details and get some form of confirmation. The lower price is given to the customer, the dealer or whoever would then get a refund from the govt at some set interval.

I think it should be a flat amount or a percentage of the purchase price so people can still buy nicer cars with it. Then if something like EIC for EVs to help lower income people would help too at tax time. I'd rather just get the price of the truck reduced up front
vs waiting for a bigger refund at tax time.
They have something like this in California where you get 1500.00 off for participating dealers.

I have not looked into all of the details so not sure what the restrictions are. I think it started last year.

I’ll contact Rivian and see if they are participating, they are not currently listed.

https://www.cleanfuelreward.com/find-your-ev/eligible-electric-cars
 

Riviot

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Evidence? My wife and I finally saved enough after 20 years to get a nice car and solar panels. We will not benefit from the full incentives because despite being middle class, we will not have enough federal tax debt to get the full value of both incentives. So if we were making more, we would get more out of these exact same incentives and we are by no means poor.
Your Honda Odyssey tells me you two likely have 2+ children. Pretty sure child tax credits are the reason you don't have enough federal tax debt. My wife and I don't and are happy to finally be able to receive a $7500+ virtue signal. Pretty sure our R1T purchase will have a much better environmental impact than extra humans.

Breeders... am I right?
 

Mjhirsch78

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Your Honda Odyssey tells me you two likely have 2+ children. Pretty sure child tax credits are the reason you don't have enough federal tax debt. My wife and I don't and are happy to finally be able to receive a $7500+ virtue signal. Pretty sure our R1T purchase will have a much better environmental impact than extra humans.

Breeders... am I right?
Nope. Child tax credit has no bearing on the tax incentive. We have to owe the federal government enough before incentives or tax credits of any kind. That 7500 plus 10k from the solar would necessitate owing them 17k, regardless of our two kids. We have never and don‘t anticipate ever owing that much even after our kids age out of child tax credits or if we hadn’t had them at all because we will never have that kind of income in our jobs (one school librarian and one teacher). Even the 7500 for just the EV is only slightly less than our total federal taxes before any adjustments. Doing the math highlights the underlying problem: these incentives are a bigger boon to higher wealth folks as they are currently set up. So, setting the incentives up as rolling over, just like business expenses work, would encourage these purchases and assure everyone gets an equal share.

Not quite sure how a comment on balancing incentives became a personal attack on folks having kids. Howdy Ad Hominem, welcome to the party.
 

Riviot

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Nope. Child tax credit has no bearing on the tax incentive. We have to owe the federal government enough before incentives or tax credits of any kind. That 7500 plus 10k from the solar would necessitate owing them 17k, regardless of our two kids. We have never and don‘t anticipate ever owing that much even after our kids age out of child tax credits or if we hadn’t had them at all because we will never have that kind of income in our jobs (one school librarian and one teacher). Even the 7500 for just the EV is only slightly less than our total federal taxes before any adjustments. Doing the math highlights the underlying problem: these incentives are a bigger boon to higher wealth folks as they are currently set up. So, setting the incentives up as rolling over, just like business expenses work, would encourage these purchases and assure everyone gets an equal share.

Not quite sure how a comment on balancing incentives became a personal attack on folks having kids. Howdy Ad Hominem, welcome to the party.
Whoopsies! Where's the tongue-in-cheek button? Should've thrown a winky face or two in there.

Agreed, they should rollover tax credits for EVs so all folks can receive the benefit. Last year was the first we ever qualified for a full credit, thanks to the wifey making (and paying) more. We considered solar this year as well, but wouldn't be able to realize the full rebate. So kicking that can to next year...
 

Mjhirsch78

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Whoopsies! Where's the tongue-in-cheek button? Should've thrown a winky face or two in there.

Agreed, they should rollover tax credits for EVs so all folks can receive the benefit. Last year was the first we ever qualified for a full credit, thanks to the wifey making (and paying) more. We considered solar this year as well, but wouldn't be able to realize the full rebate. So kicking that can to next year...
I may just be tired lol

I also learned a thing or two. Apparently the EV incentive does come after the child tax credit so it does factor in. Here’s to hoping we all can win this Tax game some day.
 

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Ladiver

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Whoopsies! Where's the tongue-in-cheek button? Should've thrown a winky face or two in there.

Agreed, they should rollover tax credits for EVs so all folks can receive the benefit. Last year was the first we ever qualified for a full credit, thanks to the wifey making (and paying) more. We considered solar this year as well, but wouldn't be able to realize the full rebate. So kicking that can to next year...
I am adding battery storage this year as well as the Rivian. Since I probably won’t have a $17,500 Federal tax liability, I will be maximize my tax liability by doing a Roth conversion. I will still have to pay State tax, but converting from pre-tax dollars to post-tax dollars achieves two things. 1) I can get the full Federal tax credits and 2) I won’t have to pay taxes when I pull from the Roth IRA in retirement. Sounds like a win win, but I would rather have the Fed Tax credit roll-over for a year or two.
 

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..... government enough before incentives or tax credits of any kind. That 7500 plus 10k from the solar would necessitate owing them 17k....

[/QUOTE

If it is any consolation, you should be able to roll the unused solar tax credit to the next year. It is handled a little different than the EV credits.
 

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The issue with solar incentives and vehicle incentives is that solar is applied first. If there is excess, it rolls over and you lose the vehicle incentive. If there is any liability remaining after the solar incentive, then the vehicle incentive is applied up to $7500. - according to my accountant.

This makes solar and EV in the same year only beneficial to those with large tax liability.
 

SANZC02

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The issue with solar incentives and vehicle incentives is that solar is applied first. If there is excess, it rolls over and you lose the vehicle incentive. If there is any liability remaining after the solar incentive, then the vehicle incentive is applied up to $7500. - according to my accountant.

This makes solar and EV in the same year only beneficial to those with large tax liability.
I am not an account but that was not how I understood it. I would have your accountant double check that to be sure, It may have changed after October 2019.

https://www.irs.gov/irm/part21/irm_21-006-003r#idm140499595953776

When I look at the above publication it shows Form 8936 plug in vehicles are applied prior to line 15 on on form 5695. It is line 30 on 5695 that plays before the plug in vehicles. As I read the form, seems like solar applies in the line 15 total that applies after the plug in vehicle credit.

I’m referencing residential and not business. I’ve never looked at it as a business credit.

I will reiterate again, I am not an accountant or tax professional just going by how I read these forms.
 
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Philzer

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There most definitely should be a cap or tiered system. the only question is at what level(s).
Offering a $7,500 tax credit on a $1M+ EV (Rimac, etc) does not increase EV adoption.
The Model S Plaid and Lucid Air Dream sales numbers would not move much - if at all - with a lower or even eliminated federal incentive (in the case of the Tesla, numbers would not increase by adding one).
EVs that sell at well over $100K will likely pick up few (if any) sales numbers by throwing in $5K. They might sell with more options, but very few people that would otherwise buy an ICE would decide on an EV instead.

The "American Made" part gets sticky. The Mach e is made in Mexico by a company based in the US. The ID.4 will be made in the US (in a year or so) by a company based in another country. Which would qualify as "American Made"? Or is it based on a country of origin for parts with a minimum US%? This kind of provision creates too much room for games, red tape and loopholes.
American made is decided by the amount of U.S. made content is inside the vehicle, not the location of the company or the factory. I believe 70% or more is required, last time I checked.,
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