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U.S. Democrats' plan boosts EV tax credit eligibility to pricier trucks, SUVs

FILE PHOTO: Electric cars sit charging in a parking garage at the University of California, Irvine

By David Shepardson

WASHINGTON (Reuters) -Democrats in the U.S. House of Representatives released an updated social spending and climate measure on Wednesday that expands a proposed $12,500 tax credit to pricier zero-emission vehicles, while lowering income limits for eligible buyers.

The updated bill, which could be voted on by the House in coming days and now includes paid family leave, revises pricing for vehicles eligible for the credit. Vans, sport utility vehicles and trucks with a manufacturer's suggested retail price of up to $80,000 are eligible, while sedans remain at $55,000 as they were under the prior version.

The earlier version capped credits at $64,000 for vans, $69,000 for SUVs and $74,000 for pickup trucks. The prior EV tax credit plan was estimated to cost about $15.6 billion over 10 years.

The new proposal limits the full EV tax credit for individual taxpayers reporting adjusted gross incomes of $250,000 or $500,000 for joint filers, down from $400,000 for individual filers and $800,000 for joint filers.

The proposal would give a big boost to electric vehicles but faces opposition from Republicans, foreign automakers and foreign governments.

The House plan includes a $4,500 incentive for union-made vehicles and $500 for U.S.-made batteries. Vehicles would have to be made in the United States starting in 2027 to qualify for any of the $12,500 credit.

The EV tax credits are backed by President Joe Biden and the United Auto Workers union and would disproportionately benefit Detroit's Big Three automakers - General Motors Co, Ford Motor Co and Chrysler-parent Stellantis NV - which assemble their U.S.-made vehicles in union-represented plants.

Foreign automakers have harshly criticized the decision to give union-made vehicles a big leg up, while 25 ambassadors wrote lawmakers https://www.reuters.com/business/autos-transportation/international-opposition-mounts-proposed-us-ev-tax-credit-2021-10-30 on Friday opposing it.

The EV proposal eliminates phasing out tax credits after automakers hit 200,000 electric vehicles sold, which would again make GM eligible, along with Tesla Inc.

Tesla and foreign automakers do not have unions representing U.S. factory workers and many have fought UAW efforts to organize U.S. plants.

The bill would create an electric bike tax credit, a 30% credit for commercial electric vehicles and a $4,000 used EV tax credit.

(Reporting by David Shepardson; Editing by Peter Cooney)