The E-Bike Act and Federal eBike Tax Credit

If you are planning to buy an electric bike or e-bike, you might want to act soon. A new bill in Congress could make your purchase more affordable by offering a generous tax credit of up to $1,500.

Jimmy Panetta first introduced it on February 11th, 2021, summarized with

“This bill allows a refundable tax credit for 30% of the cost of a qualified electric bicycle. The credit is limited to $1,500 per taxpayer, less all credits allowed for the two preceding taxable years.

A qualified electric bicycle is a two-wheeled vehicle that is, among other things, equipped with an electric motor of less than 750 watts that is capable of propelling such vehicle.”

The Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act was reintroduced in March 2023 by a group of lawmakers who want to encourage more Americans to use e-bikes as a green and healthy alternative to driving. The bill would provide a refundable federal tax credit of 30% of the cost of a new e-bike, up to a maximum credit of $1,500. To qualify, the e-bike would have to be priced at less than $8,000 and meet certain safety standards for batteries.

The E-BIKE Act aims to make e-bikes more accessible and affordable for low-income earners, commuters, seniors, and anyone who wants to reduce their carbon footprint and improve their quality of life. According to data cited by the bill’s sponsors, carbon emissions would drop by 12% if 15% of car trips were made by e-bike, and many trips made by vehicle in the U.S. are often less than six miles from driver’s homes.

The bill also aligns with President Biden’s clean energy agenda and follows the success of other federal incentives for electric vehicles (EVs). The Inflation Reduction Act passed last year included an expanded EV tax credit that offers up to $12,500 for eligible buyers. The E-BIKE Act would have similar income limits for claiming the maximum credit: up to $150,000 for single filers and $300,000 for joint filers.

The E-BIKE Act has received support from various environmental groups, bike industry associations, and local governments. For example, Denver implemented its own e-bike rebate program last year that issued more than 4,700 e-bike rebates. The program boosted e-bike sales and ridership in the city and helped reduce traffic congestion and air pollution.

However, the E-BIKE Act still faces some challenges before it becomes law. It was initially proposed two years ago as part of Biden’s Build Back Better plan but was dropped from the final legislation. It also needs to gain bipartisan support in Congress and overcome some concerns about e-bike safety and regulation.

If you are interested in taking advantage of this potential tax credit, you should keep an eye on the progress of the E-BIKE Act and consult with your tax advisor about how it might affect your situation. You should also do some research on different types of e-bikes available on the market and choose one that suits your needs and budget.

E-bikes are not only fun and convenient but also beneficial for your health and the environment. With a federal tax credit on your side, you might find it easier than ever to join the growing community of e-bike enthusiasts.

Key Takeaways:

1.30% of the cost of a qualified electric bicycle.(class 1, class 2, class3 electric bicycle all included)

A qualified electric bicycle has the following circumstances

#1. 2 wheels and a seat(or saddle) 

#2. pedals capable of propelling such a vehicle.

#3. an electric motor of less than 750 watts that is capable of propelling such a vehicle(which means e-bike models like Ariel Rider Grizzly will NOT be included )

With these conditions, an electric scooter or tandem, or tricycle will definitely NOT be included.

2. The credit is limited to $1,500 per taxpayer

#If you buy a $7000 qualified electric bike, you’ll still get $1500 instead of $7000*30%=$2100

3. The term’ qualified electric bicycle’ shall not include any vehicle if the aggregate amount paid for the acquisition of such vehicle exceeds $8,000.(expensive models with fancy titanium or carbon fiber frames or etc., that over $8000 may not be included. Second thought, though, we may expect some changes from some brands in retail prices to hug this opportunity.)