Plug-In Tax Credit Passes House: $5,000 for Chevy Volt

Buried in the bill that’s popularly dubbed the Off-Shore Drilling Bill, or H.R. 6899, is a section that details a tax credit for “New Qualified Plug-In Electric Drive Motor Vehicles.”

The credit kicks off at $3,000, and for every kilowatt hour of the battery over 5 kwh, it goes up $200, to a maximum of $5,000. That means the Chevy Volt — at 16 kwh — would get a total tax credit of $5,000. No other automaker has officially announced a plug-in electric vehicle for sale in the U.S.

This new credit will have an identical lifespan — 60,000 vehicles per company — as the original tax incentives for non-plug-in hybrids, with a similar reduction plan that reduces the credit by 50% and 25%, then down to nothing. The credit would go into effect after Dec. 31, 2008.

There are a number of restrictions we list below that are pretty cut and dried — very dry.

Comments

Nice, burying a little love for GM into the oil drilling bill. Will be interesting to see if it passes. Will be interesting to see if honda and toyota also bring vehicles to market that qualify..

Bloke has a very good (well, from IRS) explanation - that really, most people will NOT get this $5000 credit. Those that usually can get the max (or close to the max) is when you make a lot of $$$ but have very little tax deduction. My accountant has once told me that these are people who usually are
(1) Single;
(2) Rich (even after putting $ in 401K);
(3) No other way to have tax deduction.

For folks that are married, with kids, have home mortagage/401K/tax benefit accounts...you can claim almost all your income tax deduction on those already (unless you are super rich).

See Bloke's comment over @
http://blogs.cars.com/kickingtires/2008/09/2011-chevy-volt.html#comments

Amuro, a tax credit is returned for you dollar for dollar. It's not a "deduction".

That would be the no energy, no oil for you drilling bill. It's a hoax, Why would anyone buy one of these things, price the replacement battery before buying.

Pay more in taxes and government will pretend to control the weather.

Boo!

"The term “motor vehicle” means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels"

Thanks for deliberately excluding the Aptera there :P Why not just mandate that it has to have at least a 0.30 drag coefficient and weigh at least 3,000 pounds while you're in the process of deliberately shafting hypercars. Does the number of wheels touching the road *really freaking matter*?

GR,

I once had the same thought as you...only when I was 'bou to buy a hybrid, and talked to my accountant, then I found out how wrong I was (and you are). It's NOT the tax credit that you think you can get...for sure. Bloke's quote is pretty good, but essentially, AMT applies when you have pretty much no other mean to claim your tax deduction, then you can use this hybrid tax credit. You don't have to believe me - just go talk to your accountant to find out how it really works.

@ Dave T., has there ever been a "Ask Cars.com" topic on how the hybrid tax credit works? If not - this is a good one (and I'm still awaiting for the Turbo one that you said a good topic to discuss.)

Have your voice heard on HR 6899. Vote and send your vote direct to youre reps at Govit

http://www.govit.com/h_r_6899/To_advance_the_national_security_interests_of_the_United_Sta/Comments

Amuro Ray, all I think GR is saying is that a tax credit comes off your bottom line liability - if you originally owe $550 and you have a $500 tax credit, you only end up paying $50. But if you have a deduction it is taken off before your gross income is multiplied by your tax bracket percentage - if you made $30K and you are in the 30% bracket, you pay 10K, but if you have a deduction of $5K, your income would be $25K then multiplied by your tax bracket percentage, you pay a little over $8K. Not very helpful here, but meaningful when comparing incentives offered.

Bloke, I totally understand where u r going to....but hope that you also see my point. Remember - this is a 40K vehicle. No person who made 30K/yr can afford it. This is my point #1 - you need to be rich (or make much $ per year). Then when you made a lot of $ per year - which I know many people, sans myself :(- they have all these tax deduction and try their best to have their accountants to take this off and write that off as tax deduction, and as a result, they pay very little taxes! These people have mortgages, businesses, children, etc, which made that entirely possible. The only exception there - single people that don't carry mortgage (either rent or extremely rich) - usually single people. Besides, families won't buy a 40K car..."wise" familes that is (will put the $ into better living like a better house, or children education fund). Now that covers my point #2 and #3 (as per explained by my accountant). Do I think that there will be people buying this vehicle? Sure...as the old saying, a sucker is born every min. However, logic indicates that
(1) regular folks with families and a home can't and won't purchase one, but spend their money on sthg else for their kids;
(2) you have a be a looser or werido (education wise) to think that you are spending 40K just to save 5K (or saving 5K by spending 40K!).
That, my friend, is how you define a halo vehicle - 0 practicality with all the buzz on how good it is.

Amuro Ray, thank you, and I do see your point. You are saying most people won't get the tax credit. And I wish it really weren't true but there is that definite possibility. I would hope that those who buy the car with the intention of taking advantage of the tax credit do the calculations and hopefully it will work out for them. What I do hope happens is that the price for admission for a vehicle like this comes down a good bit in the near future, but I also hate to imagine that even though a car may cost this much it may make sense to buy one as the price of gas goes up.

Many of the comments stated above are fair. I would agree that everyone should check with their accountants prior to purchasing the car. That being said, it's not fair to say that MOST people will not get the full credit. When the credit on the Prius rolled around, three people at my company bought them. Myself and one other person both received the full $3150, while the third guy only got about $2000. I'm not going to try to pretend to understand tax law, but I believe that the restrictions mostly had to do with tax bracket. The two of us who got the full credit both had family incomes less than $100,000, while the third guy was way above. Needless to say, I didn't feel too bad that he missed out on $1150. :) The bottom line is that if you're an average American, you will get the credit. This incentive is not designed for the wealthy...but then again, at a price tag around $40,000, the Volt isn't designed for the average American!

All very good comments. Just an idea to insert here: Although the Aptera would not qualify under the wording of this bill presently, perhaps an upgrade for your toyota prius would. Check out calcars at http://www.calcars.org/howtoget.html for this plug-in possibility!

What about me? I ride a bicycle to work.. I have expensive task in american build bicycles so they run 5-6k with Titanium/carbon fiber bits (independent fabrications).. I don't require these environmentally harmful batteries all these new "green" cars use.. and I run on beer, I renewable resource (american owned micro of course, not the foreign owned bud/etc.). Where is my $5000 tax credit? Don't I deserve it a bit more than the guys buying these poluting battery/material beasts? I also have better health as a result of the cycling, so I help the health insurance companies bank.. again, where is my $5000?