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E-bike Tax Credit Bill
E-bike Tax Credit Bill
E-bikes can change the world for the better. This is not just a speculative statement but also a proven fact. Counties that endorsed E biking with full political will are witnessing improvements in the environment, air quality, and the overall health of their population.
Countries such as China and Amsterdam have a huge population of E-bike commuters and infrastructure that facilitates them. The success of several countries in Central Asia and Europe as cycling nations is undeniable, and the people around the world are starting to notice.
The USA is on the verge of drastic health crises in the form of an obesity epidemic. In addition to that, it also constitutes a large number of people living a sedentary lifestyle, which, combined with the abundance of fast food stores, contribute to the obesity crisis.
On top of that, the traffic problems of the US are also a burdening frustration, especially in busy cities. The mass scale shift to E-bikes is a solution that kills many birds with one. It can counter the health issues of both the planet and the people. Not to mention the other abundant benefits that E-bikes offer.
The questions of whether the federal state is willing to show the political will to encourage E-biking are still on hold. However, the recent E-bike tax Credit Bill presents itself as a step forward for the biking community and shows institutional intentions to promote this wondrous mode of transport.
The Importance of Political Will
2021 is an exciting time to be a part of the E-biking community. The growth of the E-bike industry is coming forth to an exponential rise. This growth may be partly due to the effects of the pandemic because more people are now waking up to the importance of their health in the face of the virus.
Statistics show that 90 percent of the people that suffered the most from the Coronavirus were over-weight. People are not taking this demographic lightly; thus, healthier lifestyle options are now in demand. Another thing that fuels the E-biking world is the collective efforts of reducing the carbon footprint that we leave on the planet.
Thus, the officials working in the federal biking policy units have a huge responsibility in their hands. They must adhere to the demands of the public, keeping the repercussions in mind, before they introduce their legislation. Moreover, they must figure out ways to increase funding to cities and states, so they can use it to build active transportation infrastructure for biking.
Their efforts should focus on building a transportation network that gives people a meaningful and safe biking experience. Each trail should allow them a quicker commute to each destination, and get them trails, giving safe access to recreation, which is crucial in these uncertain times. In other words, it is time that the government introduced policies that make bike riding more accessible, affordable, and secure.
This bill offers a refundable consumer tax credit that is up to 30 percent of the cost of an electric bicycle that costs less than eight thousand dollars.
The E.B.I.K.E Act
The government started the year off with some great news for E-bikers in the US. The name refers to a clever acronym for the listener’s awareness. Here, E-bike stands for electric bicycle incentive kick start for the environment act.
This bill emphatically is a new push for federal electric bike policies, stemming from not only the popularity of electronic bicycles but also the inspiring outcomes of European countries. For the past ten years, countries in Europe have made it their responsibility to subsidize, incentivize and promote E-bikes as an essential means of transportation.
Thus, the federal biking policy units are also gradually pushing policies that make bike riding a primary option for short-distance commuting. As a result, the E-bike act came about.
What Does this Bill Do?
This bill offers a refundable consumer tax credit that is up to 30 percent of the cost of an electric bicycle that costs less than eight thousand dollars. It also states that you will be eligible once every three years or twice for a couple. This is the basics of the act. The rest of the bill states about the electric bikes that are not less than eight thousand dollars.
Bikes that have a value of more than eight thousand dollars fall into a three-class definition. According to the current version of the bill, anyone who wants to purchase an E-bike can get a maximum credit that goes as high as 1500 dollars. This bill is a great incentive program for people to take up E-biking for their commutes.
The federal government is now realizing the importance of reducing motorized vehicles on the roads. The transportation sector contributes about one-third of the carbon emissions in the states, and the majority of the vehicles on the roads are single-passenger. Therefore, this environmental act is a small step towards a much broader and larger solution for the carbon emission issue.
What is a Federal Tax Credit?
To truly understand the essence of this bill, one must understand what a federal tax credit is. For people that have never used a federal tax credit, this initiative may come as confusing. You may think that you will get 30 percent off on any bike that you purchase. However, this is not exactly the truth.
You must be better aware of this bill so that you can not only apply for it but also manage to take advantage of it when it goes into fruition. For instance, if you wish to purchase an E-bike using the tax credit, it does not exactly mean that you will get a 30 percent discount on the actual price of the bike. Instead, you will have to pay the full retail price of the bike when you buy it.
Then where does the 30 percent tax cut apply? Well, after an E-bike purchase, you have to file your taxes for it and pay a certain amount. This is where you can claim a deduction for the E-bike. Oftentimes, claiming for this tax deduction requires you to fill a form in which you state how much the E-bike cost you and your tax refund.
In other words, you will get a deduction or a credit when filing your taxes for the E-bike. If you are acquiring a tax refund for the year, then you can apply to get even more of that certain refund. Alternatively, if you have to pay the taxes for your E-bike in the eligibility year, then you will get thirty percent of the tax value deducted.
If you are someone who is trying to reduce the taxes on your E-bike, then this act can be extremely helpful. On the other hand, if you are someone interested in taking full advantage of this tax cut, in mind that the maximum money you can save in tax deduction is 1500 dollars.
After you do the match, the absolute price for an electric bike purchase in the eligibility years comes out to be around 5000 dollars after taxes. If you purchase a bike that shares this price tag, you will get a full 1500 dollars credit and cut the overall cost of that bike to 3500 dollars.
The Upper Limit
The bill includes an upper limit. It does not allow any tax cut for bikes that are worth 8000 dollars or more. If you wish to splash 10,000 dollars on an E-bike, then you may not even need a tax deduction. According to the federal standards, the law only applies to bicycles that are 750 watts.
However, the bill is nothing that is set in stone and is a proposed one. This means that the federal government has not finalized it. Keeping that in mind, it makes sense as to why it is full of unanswered questions and flaws.
Can You Use the Bill Every Year?
The bill clearly states that it will not apply consecutively, which means that you cannot expect to get a tax deduction every year. However, it does mention that you can take advantage of it in the two preceding taxable years. This means that you may be able to apply for a thirty percent tax cut in the third year of another E-bike purchase, depending on whether the bill is still in place.
The Joint Return Policy
The bill is very friendly for couples that want to buy an E-bike together. You can take twice the 30 percent discount in the form of a “joint return” What this means is that a husband and a wife can purchase bikes for themselves, then they can get the 1500 dollars tax credit for each of them after filling in their tax details.
This policy may fall into a loophole according to its own rules. For example, if you are a couple that wants to purchase one E-bike instead of two, then you may be able to file both your taxes together and get a larger tax deduction than 1500. In theory, this seems possible.
Doe This Bill Apply for other Electronic Rideables?
The bill mentions that it applies to “New” E-bikes. This means that you cannot file a tax deduction for bikes other than new E-bikes. Hence, if you are looking at this bill in hopes of getting a tax deduction on an already-existing E-bike, whether it is yours or a second-hand purchase, then the tax cut will not be applicable.
Moreover, the bill also clarifies whether you can use it for things that are similar to Electric Bikes, such as electric scooters, motorcycles, mopeds, and others. According to the wordings of the bill, it will not be applicable for anything other than an E-bike.
This is why it lays down plenty of details on what qualifies as an electric bicycle to something that does not, keeping in consideration the class one, class two, and class three classifications. Some may point to a major flaw in the bill’s definition of an E-bike since it mentions all two-wheeled E-bikes and no mention of a three-wheeled E-bike.
This excludes the people that like to ride three-wheeled E-bikes, which are not very different from any other E-bike except for an extra wheel. However, there is not much to worry about since this bill is yet to apply as a law. Until now, it is nothing but a proposal.
When Can You Take Advantage of the Tax Credit?
Concerning when you buy or receive your E-bike, you can take advantage of the tax credit correlating it in terms of timing. According to this Act, if you pre-order an E-bike in 2020, and the bike reaches you after this bill passes, then you can apply this act on your bike.
However, if you received your bike before this act became a reality, then you cannot apply since the bike was in service when this bill was still just a proposal.
When Does This Apply?
Many people are wondering when this act takes place because the bill did not come with a proper date or time when this will happen. There is no definitive statement, which lets you plan your next E-bike purchase so you can get a better price on it.
However, the bill talks about a treasury report at the end of the report, which states that the treasury is due to make a report that specifies the number of taxpayers that claim the credit. This entails the number of people that use this tax credit.
Furthermore, towards the very end, it also says that this information will be out on separate documentation in 2021 and 2022. Because they were so quick to mention 2021, it shows that they have all the intentions to pass this bill this year or as soon as 2022.
What is the Federal Law for E-bikes?
The federal law supersedes any state laws. It is the most important Law that cannot be coincided with state law and matters more than any other law. According to the federal classification, a low-speed electric bicycle, or an E-bike, is a two or three-wheeled bike that has operable pedals and an electric motor that is less than 750 watts.
The Classes of E-bikes
There are three classes of E-bikes. Only one of them has the permission to go faster than 20 miles an hour, which is a class, three E-bikes.
Class 1 E-bike
According to the federal law, a class one E-bike is one that only applies electrical assist when the biker is pedaling, referring to a solely pedal-assist bike. Moreover, a class one E-bike is also one that seizes to speed more than 20 miles an hour. Thus, a proper class one E-bike is a mid-drive, with no throttle assist and a speed limit of 20mph. This means that it has a motor that is under the 70 watts limit, which is a requirement for all three classes.
Class 2 E-bike
Class 2 electronic bicycle follows the same classification protocols such as the 20 mph speed limit. However, it is one of three classes that come under the throttle assist E-bike; this means it can consist of throttle to power the bicycle. You can get away with having a hub drive if you opt for a class 2 electronic bike.
Class 3 E-Bike
A class three bicycle has a motor of fewer than 750 watts; in addition to that, it should only provide pedal assistance, meaning that throttle does not include here. Furthermore, the major difference is the speed limit. A class three E-bike has a bike limit that goes up to 28 MPH, equipped with a speedometer.
Rules Governing the Classes
However, some E-bikes that have a throttle also come with a class three-type sticker. This is a grey area when it comes to the classification of E-bikes. To sum it all up, the federal classifications say that classes one and two have to be 20mph, where class one has to be a pedal assist, and class two can have a throttle. Class three E-bikes can exceed the speed limit to 28mph but cannot generate power by a throttle.
By default, the federal law allows the use of classes one and two on regular bike trails. This means that if no special state laws are working in different ways, you can ride the class one and 2 E-bikes on bike trials without any problem.
Alternatively, the federal law bans class three E-bikes by default; thus, the law enforcers can penalize you for riding a class 3 category E-bike unless the state laws allow you to use it.
The Importance of the E-Bike Tax Credit Bill
Considering the amount of good that an E-bike can do, it is surprising that this subsidy plan took so long to come. The power that E-bikes have in terms of replacing carbon-emitting vehicles is incredible. They offer the citizens a commuting option that improves their health and provides them a chance to do their part against global warming.
This makes all the bills and federal acts that aim to increase the use of electric alternatives important. The promotion of Electric bicycles is a small part of solving the problems with congestion. Nevertheless, it can act as the stepping-stone to greater and bigger leaps towards eco-friendly endeavors.
Apart from just reducing carbon emissions and countering the climate change effects, the promotion of E-bikes introduces an option to increase mobility. This means that Americans can use the riding and exercise to demand better biking facilities once enough people start opting for it.
When you take into consideration that many of our commuting trips are less than three miles, and an E-bike makes 3 miles seem like a breeze. They can consequently replace the extra care you have standing in your garage. By doing so, you can turn your slow traffic fueled trips into more enjoyable bike rides.
Furthermore, you will eventually come to realize that a good long-term investment in the form of an E-Bike can save you plenty of costs that you would otherwise pay for your car. This is where this tax credit will come into play. With the help of this tax cut, you can find a good quality E-bike that will last you a long time at a reasonable price of three thousand dollars.
This will make your family outings, quick grocery runs, and short distant commutes more productive and better. This small deduction of 30 percent can ultimately be the little bump that can convince a person to invest in an E-bike, especially someone that is still on the fence regarding E-bikes.
Most of the time, a person also decides against the purchase because they do not want to invest so heavily in a product that they are not certain about. With the passing of this bill, the public will afford a good quality E-bike that they can use for a long time. Plus, they do not have to settle for a lesser product, which puts them at risk of not investing fully in the E-biking lifestyle. The quality of the product matter immensely in this case.
A Win for the Consumers
With the passing of this bill, it will be the beginning of a new promise for the E-biking industry and E-bikers in general. After this comes into fruition, you can also expect something even larger in terms of scale, especially in the continuation of the current bill. Something like an infrastructure policy or prioritizing a green-tax package is not farfetched if the members of congress see that representatives of the governments are backing this bill.
This tax credit bill, by the looks of it, is incredibly generous as it does not ask people to report their income for eligibility and, emphatically progressive, since it promotes a greener and eco-friendly means of travel. It promotes mobility and equity amongst the people of the USA, which is a core trait of E-bikes as transport.
They are equitable, affordable, and accessible. Equitable because the electronic assist allows everyone to ride together regardless of fitness level. Affordable because of the incredible cost savings and accessible because you can just about ride them on any type of trail and never have to worry about traffic or parking.