Tax Credits

Government-led transportation initiatives should support a competitive marketplace, technological innovation and protect consumer choice.

• From FY2011 through FY2022, the federal EV tax credit is projected to cost the federal government nearly $10 billion in forgone revenue.
  • The Joint Committee on Taxation estimates the federal EV tax credit will cost the federal government $7.5 billion between fiscal years 2018 and 2022.
  • From FY2011 through FY2017, the federal EV tax credit totaled $2.2 billion in forgone federal revenue.
• The federal EV tax credit is regressive, as higher-income households benefit more from the program because they are more likely to purchase EVs and thus claim the deduction.
  • The nonpartisan Congressional Research Service found that federal “EV tax credits are disproportionately claimed by higher-income taxpayers,” noting that nearly 80% of filers claiming the credit have incomes of $100,000 or more.
  • Lower income Americans that owe no federal taxes cannot benefit from the EV tax credit because it can only be applied the amount a household owes in federal taxes. In 2019, an estimated 44% of Americans paid no federal income taxes, meaning nearly half of the country was disqualified from receiving the credit.
• Corporations receive about half, or $3.7 billion, of the foregone revenue associated with the federal EV tax.
• Nearly 70% of U.S. households would have purchased EVs without the federal tax credit.
• Various consumer preferences for range, flexibility and cargo capacity are among the reasons why EVs still represent less than two percent of the U.S. auto market, and only about three percent of new car sales globally. In recent polling from Morning Consult, about 50 percent of U.S. adults say they are unlikely to purchase an EV in the next decade, and that hybrids hold more appeal than electric vehicles.