The US spending bill just agreed to last night includes extension of tax credits for home EV charger installations, electric motorcycles, and fuel-cell vehicles.
These credits were previously extended through the end of 2017, though that time the extension was retroactive, as taxpayers didn’t know about the incentive during the incentive period. Now, those credits have been extended retroactively again — covering the last two years, since 2017. They’ve also been extended forward through the end of 2020.
Earlier this week, Electrek reported about the possibility of an extension of the tax credit for electric vehicles that would allow a $7,000 credit and institute a new credit for used EVs as well. This would have benefitted two American automakers, GM and Tesla, who are the only automakers to have hit the 200,000 car limit for the $7,500 federal tax credit.
That extension was later quashed, reportedly after intervention from the White House. Currently, several foreign automakers can still make full use of the tax credit, thus disadvantaging current offerings from two domestic automakers when compared to foreign competition.
Some lesser-known credits are those that have to do with EV charging, motorcycles, and fuel cells.
Due to an amendment made to the year-end spending bill, taxpayers will once again qualify for a 30% rebate (up to $1,000) on costs associated with the installation of an EV charging station, a 10% credit (up to $2,500) on 2- or 3-wheeled electric vehicles such as electric motorcycles, and a $4,000 credit for the purchase of a new fuel-cell vehicle.
These credits previously expired at the end of 2017, but will now be available through the end of 2020. The credits are available retroactively. Presumably, this means that taxpayers can and should file amended returns for previous years.
We mentioned above that these credits have been available on and off during the years. They had expired in 2015, but then in 2016, Congress extended the credit to cover that year. But it wasn’t much of an incentive, since they passed this extension on December 27, giving taxpayers only five days to take advantage of the incentive.
Buyers who had bought and put into service an EV charger, motorcycle, or fuel-cell vehicle prior to those days still got to reap the benefits, but the incentive can’t have affected their decision, because it had already expired when they made that decision.
Then in 2018, the credit was again extended, but this time in February, and only for the previous year. Once again, this did not function to incentivize anyone, except those who rolled the dice on a prediction that Congress might be dysfunctional enough to extend an incentive after the entire incentive period has passed.
The credit was not further extended, so anyone who put into place an EV charger in 2018 or 2019 did not, until now, gain any benefit from it.
It ought to go without saying (even though we’ve said it a few times already) that this is a stupid way to incentivize people to do anything. Yet here we are.
For all the talk about “regulatory certainty,” this government doesn’t seem to want to provide it. Haphazardly changing credits like this after the fact doesn’t help change people’s behavior, which is the whole point of these credits.
It also complicates the burden on taxpayers of an already-complicated tax code, as it means that people will have to dig up information from anything they did in 2018 and file an amended return in order to access these credits. Most people likely won’t hear about it, either, so they’ll probably miss out on what they’re due.
Note that we are not complaining about the existence of these credits, but the ridiculous way in which they are implemented. For businesses and individuals to plan ahead and make smart choices, the effects of these choices need to be transparent into the future, and retroactive incentives do not provide that.
And at least this time, it actually extends the credit going forward, so at least we’ll have one year of actually incentivized behavior. Anyone who buys an EV charger, electric motorcycle, or fuel-cell vehicle from now until the end of next year will know ahead of time that they can get some money back for it. Great. Finally.
But mark one point for us. Here’s the cynical prediction from the last time they did this:
If you’re planning on getting an EV this year, the incentive does not apply, though might be extended again by Congress (and if that EV is a Model S or X, you can use our Tesla referral code). The current budget deal expires on March 23, so maybe we’ll learn more then. However, given their track record, it’s entirely possible that Congress will choose to extend the refueling credit again after the end of this year, but we might not know about it until well after the fact, like the last two times — and maybe even after you do your 2019 taxes.
Thanks, Congress. Chalk (another) one up for cynicism, I suppose.
Though what we really need is to end this patchwork of credits and just put a price on pollution already. Then we won’t need to continually extend individual credits and confuse everyone on their taxes in a different way every year.
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