Publication Date
1-2025
Description
Federal and state governments, desiring improved air quality and reduced carbon emissions, have enacted legislation that encourages widespread personal use of electric vehicles. Policymakers often use tax incentives to encourage electric vehicle adoption, and we use this rich setting to explore multi-jurisdictional interactions between ESG objectives and tax policy. In this paper, we critically analyze the federal and state tax implications of purchasing personal-use electric vehicles. We show that state-level variation in incentive structure and administration can create adverse, unintended consequences for both the government and taxpayers. In particular, rebates on electric vehicle purchases can result in significant tax consequences, particularly for lower-income taxpayers. This potentially limits efficacy and undermine the stated environmental and social goals of policymakers. We conclude our analysis with key considerations for future iterations of electric vehicle adoption policy.
Type
Working Paper(unpublished)