Democrats' spending bill lets wealthy claim tax credits on pricey electric vehicles
The spending bill provides up to $12,500 in tax credits for electric vehicle purchases
Democrats' proposed spending bill will allow households with yearly incomes as high as $500,000 to claim tax credits on pricey electric vehicles that cost up to $80,000.
The bill provides up to $12,500 in tax credits for people who buy electric vehicles that meet certain qualifications. The income threshold for people to qualify for the tax credit is $500,000 or less for joint filers and $250,000 for individuals.
The full tax credit covers electric trucks, vans and sport utility vehicles (SUVs) costing up to $80,000. For comparison, the median household income in 2020 was $67,521, according to the U.S. Census Bureau.
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The bill specifically prioritizes U.S. companies with union workforces, in a victory for Democrats' labor union allies like the United Auto Workers (UAW).
The bill makes $4,500 of the potential $12,500 tax credit dependent on whether the vehicle was produced in the U.S. by a manufacturer with a collective bargaining agreement in place.
The tax credit for electric vehicles isn't the only provision in the bill that could benefit high earners.
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House Democrats are also seeking to significantly raise the federal cap on state and local tax deductions, from $10,000 to $72,500 for five years, which would be a boon to wealthy individuals in states with high income tax rates like New York.
The benefits of raising the cap to that level "would accrue disproportionately to high earners," according to an analysis from the Committee for a Responsible Federal Budget, a nonpartisan budget watchdog.
"While those in the middle of the income spectrum would receive an average tax cut of roughly $20 per year, the highest earners would enjoy over $23,000 per year in tax cuts from this provision," the analysis states.
Another nonprofit, the Tax Foundation, found that roughly 80% of the benefits from raising the SALT cap to that level would go to filers earning over $200,000 a year.