Electric Vehicle Tax Credits in Democratic Plan

The House’s current Build Back Better plan calls for extending a $7,500 tax credit for the purchase of electric vehicles, and it includes an additional $4,500 credit for electric vehicles built in the U.S. by union labor.

In a press conference blasting the House Democrats’ bill, Sen. Lindsey Graham may have left a misleading impression when he said that under the plan, “we go from 50 vehicles eligible for the $7,500 to two, two Chevy cars.”

Graham then went on to correctly refer to the $4,500 credit, saying that “under their construct, the $4,500, the big part of it, will only be eligible for companies that hire union workers.” Graham also explained it more precisely in a press release a day earlier. But his comments at the press conference may have confused viewers, and so here, for clarity, we provide an explainer of what is being proposed. 

The first EV tax credits were introduced in 2008 under President George W. Bush and were expanded in 2009 under President Barack Obama. The policy allows taxpayers to get credits of up to $7,500 for the purchase of electric-powered vehicles, provided individuals owed at least that much in taxes that year.