[VoltenRock]

So I've been kicking around a new Volt, or maybe a Bolt when it gets to my state, and just don't know whether this time in 2018 the federal tax credit will even be around to claim on my taxes.

The government can do anything it wants. And if Congress wants to kill it, they can.

It bothers me that I could rely on a $7,500 tax credit, buy a Volt, and then--come 2018--find I'm SOL. It's a $7,500 financial risk. Unless you lease, of course, which won't work for me.

So any tax professionals here know if Congress can eliminate a tax credit retroactively for the entire year? I'm just concerned 2017 EV buyers could get hosed.

 

[Tom17]

I believe they will still honor the 200,000 sold credit for each manufacturer. I do not expect and extension on this credit as they will likely just let it die out. Changing this could cause a big commotion.

 

[bjrosen]

Tax bills are never retroactive except when they contain a stimulus because of a financial crisis. Assuming we get a new tax bill this year, and it's looking more and more iffy that we will, any change to the EV credit will occur in 2018. Even if they do choose to eliminate it I would guess that they will gradually reduce it rather than kill it immediately. If you want a Volt or a Bolt this you should buy one now to be assured of the credit.

 

[ClarksonCote]

Tax bills are never retroactive except when they contain a stimulus because of a financial crisis. Assuming we get a new tax bill this year, and it's looking more and more iffy that we will, any change to the EV credit will occur in 2018. Even if they do choose to eliminate it I would guess that they will gradually reduce it rather than kill it immediately. If you want a Volt or a Bolt this you should buy one now to be assured of the credit.

My guess is they will sunset the credit for all manufacturers once one reaches 200,000 plug-ins sold. They can claim they ended it early, and it also prevents the government from effectively awarding the laggard automakers that didn't introduce successful plug-ins. Even under Obama, many expected this is what would happen.

Long story short, until at least one manufacturer hits 200,000 plug-in vehicles sold, you should be have no worries. And any plug-in sold before that threshold will be eligible for its full tax credit.

 

[BAZINGA]

And the pisser is manufactures that dragged their feet and let manufactures like Tesla, GM and Nissan who took the lead will take it in the shorts and other manufactures that sat on the sidelines will benefit.

 

[DonC]

A bit hysterical. Congress can't do anything it wants since there is something called the Constitution and something called the court system which enforces its provisions. Look no further than the recent immigration order to see how this works. Now you can change the tax law once you have introduced a bill reflecting a proposed change, that gives notice, but that hasn't happened and there is no movement to do that. With all the major issues on the table it seems hardly likely.

You also have to look at the politics. Given where the Nissan Leaf is assembled, I don't see either of the Senators from Tennessee supporting a repeal. Maybe an extension or a sunset date certain, but not a repeal.

But to address your question: If you were going to lose your credit you would know about it when you bought the car.

And the pisser is manufactures that dragged their feet and let manufactures like Tesla, GM and Nissan who took the lead will take it in the shorts and other manufactures that sat on the sidelines will benefit.

+1. The expectation was that the price of batteries would drop faster than it has.

 

[viking79]

I really hope they kill the tax credit this year for all manufacturers (so you can only get tax credit if you buy EV this year, or maybe next year). This removes the tax credit from late players. As others have said, I don't think anyone will get stiffed out of the credit if they buy an EV this year, if they kill it will most likely be for purchases after a certain date.

To me, something like a carbon tax makes more sense than requiring minimum CAFE EPA MPG requirements. The current system allows companies to produce fuel inefficient vehicles as long as they also produce clean vehicles, or trade and buy credits so the net effect is less. If you tax the fuel based on carbon content, if you buy an inefficient car you pay a lot more, if an electric company uses coal they pay a lot more. This will force a move to low carbon energy sources and those will become more cost effective. It eliminates the credit trading and need for things like minimum MPG.

 

[Jmaj]

Agree, tax credit won't be revised for 2017. Afterwards anything could happen from do nothing to elimination. What with Mary Barra on the economic board and Musk playing nice I would expect at most some tweaking like perhaps setting an overall cap that is less than the sum of the parts. Rewards the risk taker early adopters but keeps the overall cost within single digit billions.

 

[dutch husky]

I don't see this tax credit, which was passed and signed by Bush (not Obama) being at the top of Trump's priority list. They'll be working on the ACA replacement for months, if not years. And because it will take an act of Congress, literally, to get a new bill passed that eliminates or restructures the credit, I think you'll have plenty of warning. (Remember...a bill must be introduced, passed in committee, introduced on the floor, passed by both houses, then conference committee, then back to the floor for passage, then to the president for signature...it's not, usually, a quick process).

As close as Tesla and GM are to the phase-out, I don't see anything happening until after they've started to phase out already, some time next year. And I'm sure GM has started to plan for the price reductions, or at least increased incentives, to keep Bolt and Volt pricing competitive once the phaseout occurs...

 

[jsmay311]

[..]this tax credit, which was passed and signed by Bush (not Obama)[...]

That's kinda true. Kinda not.

The original PEV tax credit was signed into law by Bush in October 2008 as part of the bank bailout/TARP bill. But it was passed by a Democratic House and Senate and strategically bundled with the must-sign TARP bill, which Bush couldn't veto. (He almost certainly would not have signed a stand-alone EV tax credit bill.) And that original bill only allotted 250,000 total credits.

Four months later Obama signed the stimulus bill that created the tax credit structure as we know it today. This bill greatly expanded the credits from 250,000 total to 200,000 per automaker -- a nearly ten-fold increase (based on the fact that 12 automakers are currently selling eligible vehicles in the US).

 

[Just_Jon]

...because it will take an act of Congress, literally, to get a new bill passed that eliminates or restructures the credit, I think you'll have plenty of warning. (Remember...a bill must be introduced, passed in committee, introduced on the floor, passed by both houses, then conference committee, then back to the floor for passage, then to the president for signature...it's not, usually, a quick process). ...

It would great if this Schoolhouse Rock version of how a bill becomes a law were true.

In actual practice, many, if not most, changes to law these days are done as amendments to other unrelated bills.

Some senator, with an axe to grind with EV's, will add an amendment to a military spending bill and it will be bye-bye tax credit.

 

[kns]

...The government can do anything it wants. And if Congress wants to kill it, they can...

Exactly right. While they don't usually retroactively remove a benefit, they certainly could. Anything you read about likely outcomes is pure speculation. Especially with the House and Senate on different tracks and with such an unpredictable administration.

KNS

 

[DonC]

It would great if this Schoolhouse Rock version of how a bill becomes a law were true.

In actual practice, many, if not most, changes to law these days are done as amendments to other unrelated bills.

Some senator, with an axe to grind with EV's, will add an amendment to a military spending bill and it will be bye-bye tax credit.

You have a point but the dynamics have changed a great deal. You need 60 votes in the Senate to pass a bill which isn't subject to reconciliation. Before Democrats would live with things they didn't like because they had a Democratic president who wanted the bill. Now they don't. So if a bill contains things they don't like they can just kill it until the offending provisions are taken out.

Now the tax credits might be addressed during reconciliation but that will already be such a contentious process the Republicans can't afford any more controversy than they will have. So I'd expect any bill to have some pluses as well as minuses. Given that the US manufacturers (I'm including Nissan in this group) would benefit from a change, we may see a change pitched as something to help the American auto industry.

 

[KenC]

So I've been kicking around a new Volt, or maybe a Bolt when it gets to my state, and just don't know whether this time in 2018 the federal tax credit will even be around to claim on my taxes.

The government can do anything it wants. And if Congress wants to kill it, they can.

It bothers me that I could rely on a $7,500 tax credit, buy a Volt, and then--come 2018--find I'm SOL. It's a $7,500 financial risk. Unless you lease, of course, which won't work for me.

So any tax professionals here know if Congress can eliminate a tax credit retroactively for the entire year? I'm just concerned 2017 EV buyers could get hosed.

I'm no tax pro, but retroactive tax change that negatively affects taxpayers as in your example is rare to nonexistent.

 

[llninja]

It all comes down to when GM build's its 200,000th Ev for sale in the US (I dont' think cars slated for Canada or other places in the world count). When that milestone is reached, there are 2 calendar quarters remaining (part of the quarter might be lost depending on how far into that quarter we get when they make their 200,000th EV). So, if they hit 200k cars on Oct 1st, 2017, then you can submit your tax form before March 31st 2018 and probably still get the full tax credit.

Check out the phase-out section on this page for a better description

http://www.fueleconomy.gov/feg/taxevb.shtml

Since some tax forms aren't readily available, I'm guessing they will go by purchase date, not tax form submission date for the cutoffs.

 

[VoltenRock]

I'm no tax pro, but retroactive tax change that negatively affects taxpayers as in your example is rare to nonexistent.

Agreed it rarely happens, but I was hoping for a clear prohibition before betting $7,500 on it. I also checked with my accountant--he's not aware of any situation where the government let taxpayers make purchases based on a tax credit and then eliminated it before filing time, but he unfortunately doesn't know of any prohibition against it (although he said it would be an "interesting case.").

 

[Toolworker]

Agreed it rarely happens, but I was hoping for a clear prohibition before betting $7,500 on it. I also checked with my accountant--he's not aware of any situation where the government let taxpayers make purchases based on a tax credit and then eliminated it before filing time, but he unfortunately doesn't know of any prohibition against it (although he said it would be an "interesting case.").

There was speculation on this in the New York Times today. They (and most) think that although tax cuts are often made retroactive, it's unlikely for tax credits to be removed or tax increased retroactively. If it were going to be removed, it would probably be as of 2018, or conceivably an earlier date like the date the bill will first be heard in committee.

And although anything is possible from this White House, Congress is still somewhat sensitive to this kind of thing.

That said, if Congress wanted to raise money for something really important - building a wall, for example - they might go after some tax break used mostly in blue states. But there's not that much money in the EV credit to be worth going after.

Bottom line - nothing's certain, but it would be surprising if the credit were removed retroactively. Go buy your Volt.