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Senate improves EV tax credit in largest climate bill ever

by Jameson Dow

The Senate has voted to pass the Inflation Reduction Act, which includes nearly $400 billion over 10 years in funding for climate and energy related programs, and an extension and improvement of the US electric car tax credit.

The bill passed with a vote of 51-50, with all Democrats supporting and all Republicans opposed and Vice President Kamala Harris acting as the tiebreaker vote.

The bill now goes on to the House, where it is expected to pass within the week, and then to President Biden’s desk.

The Inflation Reduction Act is a trimmed-down and rebranded version of the original Build Back Better proposal, which stalled in the Senate due to objections from all Republicans and Democrat Joe Manchin.

After much negotiation, Manchin finally agreed to a version of the bill that would allow it to pass despite Republican opposition to necessary climate measures.

The bill primarily focuses on climate issues, but also includes significant corporate tax and prescription drug and healthcare benefits partially intended to chill inflation over the next decade.

The climate portion of the bill represents $369 billion in spending, down from the $550 billion in the original Build Back Better proposal.

Analyses show that the investments in the bill could put the US on target to reduce emissions between 31-44% (below 2005 levels) by 2030. President Biden’s goal was to put the US on target for a 50% reduction by 2030, so this bill falls short of that goal, but brings us closer to the mark.

Continue reading about the Inflation Reduction Act to see what else is included in the bill, learn how it affects EV tax credits, and read Electrek's Take.