More programs have popped up that are geared towards incentivizing the population to choose vehicle options that limit damage to the climate and environment. Read on to see how you can be rewarded!
The Build Back Better bill is a $1.75 trillion plan designed to strengthen the social safety net and to fund programs that can help with climate-related issues.
The bill includes a refundable 30% tax credit for certain types of e-bikes that cost up to $4,000. Any American who makes $75,000 or less qualifies for a credit of up to $900 on one bike. Couples who earn up to $150,000 can buy two bikes and qualify for a credit of $900 each.1,2
What are E-bikes?
E-bikes resemble ordinary bicycles, but they include a battery-powered motor that helps move the bike. There are three classes of e-bikes:
- Class 1 pedal-assist: These have a low-speed electric motor that kicks in to help with peddling at speeds up to 20 mph.
- Class 2 throttle-assist: These have electric motors that are activated using a hand throttle. As for Class 1 e-bikes, the motor speed of Class 2 e-bikes is limited to 20 mph.
- Class 3 pedal-assist: These have higher-speed, pedal-engaged electric motors that can reach up to 28 mph.
Class 1, 2, and 3 e-bikes qualify for the tax credit as long as they fit the other requirements outlined above.1,2
E-bike or Easy E-Rider?
While e-bikes are suitable for getting around town and shorter jaunts, electric motorcycles may be an option for those venturing further afield. Like electric cars, electric motorcycles are designed with longer trips in mind. There’s also the undeniable fact that the motorcycle is still one of the coolest types of vehicles on the road (provided you keep the rubber on the pavement and the shiny side up).
The Build Back Better plan also has a tax credit available for electric motorcycles; it’s capped at $7,500, and has a specific set of requirements. For example, the motorcycle must have a speed of at least 45 mph and a 2.5 kWh (or higher) battery. The bill covers electric motorcycles intended for use on roadways—so you may need to save a little more if you want an electric dirt bike or another off-road vehicle.2
If you’re under the impression that there’s already a tax credit, then you’re correct. There’s currently a 10% tax credit. The Build Back Better plan would raise it to 30%.2
In some cases, two- and three-wheel electric scooters may also qualify for the tax credit. If you aren’t certain about whether your dream purchase qualifies, just check with the dealership. They may even have processes in place to help you claim the tax credit and/or to offer on-site financing.2
As always, check in with your trusted tax professional when you’re intending to make a major purchase and claim a tax credit. They can provide details that may be helpful to you.2
Whether your goal is to save money or reduce your carbon footprint, there are several attractive electric vehicle options to consider. Regardless of your choice of ride—be it an electric bike, scooter, or motorcycle—don’t forget to protect yourself by picking up the appropriate safety gear, including a helmet!
For more information or any questions regarding qualifications in tax credits for vehicles, feel free to contact us at California Retirement Advisors, where you can meet with a financial advisor today.
By Christian Cordoba
CERTIFIED FINANCIAL PLANNER™
Founder, California Retirement Advisors
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