Sen. Joe Manchin, D-W.Va., — a key holdout on previous Biden administration climate policy legislation — and Senate Majority Leader Chuck Schumer, D-N.Y., announced Wednesday that they reached an agreement on legislation that includes an extension of the electric vehicle federal tax credit, along with energy, tax and healthcare cost provisions. The bill, the Inflation Reduction Act of 2022, would also dedicate funds to cutting the federal deficit by approximately $300 billion, according to a summary released by Senate Democrats.
Federal tax credits for electric and hydrogen-fueled vehicles will be set at $7,500 for new vehicles and $4,000 for used ones, with new income limits for buyers. The income cutoffs for receiving the credit for new vehicle purchases are $150,000 for individuals and $300,000 for married couples; for used vehicle purchases the cutoffs are $75,000 for individuals and $150,000 for married couples. The bill also eliminates the 200,000-unit phase-out of credits for manufacturers — a threshold Tesla and General Motors had already hit — a key concern for automakers and EV buyers.
“This legislation ensures that the market will take the lead, rather than aspirational political agendas or unrealistic goals, in the energy transition that has been ongoing in our country,” Manchin said in a press release his office issued.
Democrats hope to pass the legislation through a reconciliation package, which is expected to go to the Senate next week. In the joint statement, Manchin and Schumer said they had reached an agreement with President Joe Biden and House Speaker Nancy Pelosi, D-Calif., to also use the bill to pass comprehensive permitting reform legislation before Sept. 30 to advance domestic energy and transmission projects.
“This bill’s passage will create millions of good-paying American jobs in the clean transportation industry, drastically cut consumer energy and transportation costs, and boost public health by decreasing carbon emissions and other pollution,” said Joe Britton, executive director at the Zero Emission Transportation Association, in an emailed statement.