• Buyers of Tesla and other EVs could be eligible for federal tax breaks under a new Senate deal. 
  • The bill lifts a tax break cap that excludes EVs made by firms which sell more than 200,000 cars per year. 
  • Previously the sales cap meant that Tesla owners were not eligible for the tax break.

Buyers of Teslas and other electric vehicles could be eligible for up to $7,500 in federal tax breaks if the reconciliation bill agreement struck by Senate Majority Leader Chuck Schumer and Senator Joe Manchin is approved. 

After months of back and forth over the details, originally proposed in President Biden's Build Back Better Bill, the pair surprised Senate colleagues when they announced Wednesday they'd struck a deal on legislation aimed at boosting investment in clean energy, reforming taxation, and cutting the deficit. 

The bill, dubbed the Inflation Reduction Act, includes a swathe of tax credits for Americans who invest in greener homes and EVs. 

Americans who buy certain types of EVs purchased after 2010 have been eligible for tax breaks of up to $7,500 for several years, however, the benefit starts to phase out once a firm surpasses 200,000 sales, meaning the likes of Tesla are excluded from the program.

Tesla delivered more than 254,000 cars in the second quarter of 2022 alone. Elon Musk has previously projected the firm will make as many as 1.5 million EVs this year, per The Wall Street Journal.

That cap has been removed from the proposed bill, which also now extends a tax credit — worth up to $4,000 — to people who purchase used EVs. It does include some stipulations based on household earnings and excludes plug-in vehicles priced above $55,000, as well as vans and SUVs costing more than $80,000. 

Americans looking to switch to greener cars have seen the cost of EVs soar over the last year, due to rising costs of raw materials, as well as a shift my manufacturers toward luxury models. 

In June, the CEOs of Ford, GM, Toyota US, and Stellantis wrote to lawmakers asking for the cap to be lifted, claiming it limited their ability to sell vehicles, Reuters first reported. 

Republicans are set to unanimously reject the bill, citing concerns over soaring inflation, per The Wall Street Journal.

Read the original article on Business Insider

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