Republicans axing EV credit, phasing out ones for green energy in budget bill

House Republicans on Monday announced that they plan to repeal Democrats’ tax credits for electric vehicles (EVs) and phase out those that apply to climate-friendly energy sources.

The green energy credits have long been in the GOP’s crosshairs as party leaders decry climate spending. But they have also emerged as a point of conflict within the party, as Republicans whose districts house low-carbon energy projects have called for at least some of them to remain in place. while Freedom Caucus members have called or a full repeal.

It’s not immediately clear whether either side of that debate — let alone both — will be satisfied with the approach ultimately taken by the Ways and Means Committee to phase out many major credits — while cutting others. 

In the text of their “big beautiful bill” released on Monday, Republicans called for terminating tax credits for pre-owned EVs purchased after the end of this year and new vehicles put in service after the end of next year.

The measure also includes a cap for new EVs put in service between 2025 and 2026, saying consumers will not be eligible for the tax credit if they buy from a manufacturer who has sold more than 200,000 EVs in the U.S. between 2010 and 2025.

Both sets of credits previously applied for EVs purchased through the end of 2032.

Meanwhile, the package also seeks to phase out credits for low-carbon energy sources. While these tax credits were expected to be a particular boon for wind and solar, they apply to any energy source that meets certain emissions thresholds.

In the GOP’s legislation, these credits will reduce to 80 percent for projects that begin producing energy in 2029, 60 percent for a project that begins producing energy in 2030 and 40 percent for a project that begins producing energy in 2031. After 2031, new projects will not be eligible for the credits. 

In the Democrats’ 2022 bill, energy projects could be eligible for the full credit through the later of either 2032 or when the U.S. cut its electricity-related emissions by a quarter. 

The bill also phases out tax credits for nuclear energy along the same timeline. 

Meanwhile, it ends a tax credit for hydrogen energy projects whose construction starts after this year, while Democrats would have had the credit apply for facilities whose construction begins before 2033.

After this year, tax credits for electric vehicle chargers, home energy efficiency updates and home renewable energy like rooftop solar are also axed.

—Updated at 4:25 p.m. EDT