The Sentinel: Tax Credit

Electric vehicle owners may lose 4-figure tax credit in Republican budget plan

It is estimated the federal government spent about $2 billion in advance point-of-sale EV tax credit payments.

by Terri Dee
Indiana News Service

INDIANAPOLIS, IN - Supporters of electric vehicle ownership said there are a number of advantages to owning one.

Studies show EVs can convert 85% to 90% of their energy into forward movement. A majority of the electricity used in an EV vehicle is American-made and an EV can be charged at home, just like a cellphone.

Despite the benefits and their popularity, Rep. Mike Johnson, R-La., the Speaker of the House, has proposed removing a $7,500 tax credit for EV owners as part of President Donald Trump's goal to restructure the country's budget.

As of December 2023, the Department of Energy shows slightly more than 26,000 Hoosiers own an electric vehicle.

John Higham, board member of the Electric Vehicle Association, wondered if it will cause potential EV car buyers to back away.

"Do I think if this $7,500 tax credit suddenly disappeared, it's not going to kill the electric vehicle?," Higham asked. "It might slow the acceleration of the adoption of the electric vehicle but it's certainly not going to reverse the trend."

Trump's budget proposal could pass between the end of May and the end of July. Higham acknowledged the tax credit is a strong motivator for people to buy or lease an electric car. And he expects a 10% to 12% growth rate for purchases. Higham admitted the number could drop to between 8% and 9% if the tax credit disappears.

As of December 2023, the Department of Energy shows slightly more than 26,000 Hoosiers own an electric vehicle.

The Republican controlled House has proposed legislation to extend the tax credit until the end of 2025 and analysts said the largest EV automaker, Tesla, owned by Trump associate Elon Musk, would be affected the most if the tax credit ends. Higham noted the fallout of repealing the tax credit could break down along party lines.

"That economic engine that is in those red districts, where there's new battery manufacturing put in, new automotive manufacturing put in," Higham pointed out. "Those are the voters that are going to feel it the most, are in those red districts. And so there are Republican congressmen who are saying, not quite so fast. It is harder to repeal than I think most people realize."

In 2024, it is estimated the federal government spent about $2 billion in advance point-of-sale EV tax credit payments. Buzz about the tax removal may push consumers to buy EVs sooner than later, to take advantage of the credit before it disappears.

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Foundation study reports Illinois' child well-being varies widely by race

by Terri Dee
Illinois News Connection

A new report looks at children's well-being in every state and finds in Illinois, the outcomes vary greatly depending on race.

In its Race for Results report, the Annie E. Casey Foundation analyzed indicators of child well-being, from early childhood education and reading achievement, to family resources.

One indicator needing attention is fourth-grade reading proficiency. One in three Illinois students is reading at grade level, but only 13% of Black fourth graders.

Katelyn Jones, vice president of policy research and evaluation at YWCA Metropolitan Chicago, explains the need to correct the discrepancy early.

"We know for a fact, based on lots of research, that reading proficiency levels at the fourth grade level are really strong indicators for high school graduation rates, college enrollment, income," Jones outlined. "All of these benchmarks for success later in life."

On the Casey Foundation's scale of 1,000 points, white children got the highest score for well-being in Illinois, at 740 points. Hispanic children saw a score of just over 500 points, and Black children, 341 points. Jones noted parents working long hours and the cost of early childhood education programs are additional factors in the education disparities.

The report suggested expanding the federal Child Tax Credit and Earned Income Tax Credit could help narrow the gaps for children of color, along with targeted programs and policies. Jones pointed out the need for continued support for early childhood education to help set kids up for success in school. She acknowledged one resource is showing promise to achieve the goal.

"Illinois is doing a pretty good job of that," Jones noted. "The governor's Smart Start Illinois program, as that goes into effect, I'm sure that will work to address many of the challenges."

The Smart Start Illinois program is a multiyear plan to provide every child with access to preschool, increase funding to child care providers and reach more vulnerable families with early support.

Invest in Kids Act expires at the end of the year, lawmakers can change that

by Dylan Sharkey, Assistant Editor
Illinois Policy

As lawmakers return to Springfield, the clock is ticking to expand the Invest in Kids Tax Credit Scholarship program which helps more than 9,000 low-income students find the school that best fits their needs.

Bose Clodfelter and her family rely on the program as the only way to afford a private school where her children have found a better cultural and academic environment.

"It’s very important that politicians allow this tax credit to continue so my family can have the opportunity to be a part of a school system where our children and my family as a unit thrives," Clodfelter said.

The Invest in Kids Act is set to expire at the end of 2023. Families such as the Clodfelters who have benefited from the scholarships are asking lawmakers to make the program permanent to give them and their kids a choice about their schooling.

"I think that it’s very important for people to have the ability to donate to the tax credit scholarship program because they care about the educational needs of the community and that people have the choice and a right to get the education that they want for their children," she said.

Tax credit scholarships are funded by donations, with a $75 million cap. Donors then receive an income tax credit equal to 75% of their donation.

Gov. J.B. Pritzker recently changed his stance and now supports the program.

State lawmakers are in their lame duck session and have a chance to improve the program by getting rid of the 2023 sunset provision and making the program permanent. While that may be unlikely with gun control and abortion and other issues clouding the short agenda, it would be a great way for parting lawmakers to strengthen their legacy from the 102nd Illinois General Assembly.

If they do not act, state lawmakers of the 103rd General Assembly will have a new chance starting Jan. 11.

Dylan Sharkey is an Assistant Editor at Illinois Policy Institute, a nonpartisan research organization that promotes responsible government and free market principles. This story was originally published on January 6, 2023.