Personal Finance

There’s risk Trump will axe funding

Published

3 months ago

November 20, 2024

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Prospective car buyers considering an electric vehicle may need to act fast to get a Biden-era EV tax credit worth up to $7,500, due to the likelihood that President-elect Donald Trump and Republicans on Capitol Hill will axe those savings in tax negotiations next year, according to auto and legal experts.

“There’s no question there’s real risk in the EV credit going away” in 2025, said Jamie Wickett, a partner at law firm Hogan Lovells who specializes in federal tax policy, energy and the environment.

“If you’re a consumer in the market for an EV, I would without a doubt push that into 2024, if at all possible — whether an outright purchase or a lease — just to reduce the risk of the credit going away,” Wickett said.

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The Inflation Reduction Act offered federal EV tax breaks through 2032 for consumers who buy or lease new or used EVs, including all-electric and plug-in hybrid electric vehicles.

The credit is worth up to $7,500 for new cars and $4,000 for used ones.

The IRA, which President Joe Biden signed in 2022, also made it easier for consumers to access the savings by allowing dealers to pay the funds upfront at purchase instead of waiting until tax season.

Trump pledged to ‘cancel the electric vehicle mandate’

The Trump transition team reportedly aims to eliminate the EV credits to raise money for a broad package of tax cuts Republicans are expected to pursue next year.

Trump’s campaign agenda vowed to “cancel the electric vehicle mandate.”

Elon Musk, chief executive officer of Tesla and an influential Trump supporter, has also called for an end to the credits and said killing the subsidies would hurt the EV maker’s U.S. competitors.

Karoline Leavitt, a spokeswoman for the Trump-Vance transition, said the president-elect would follow through with his pledge.

“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail,” Leavitt said in an email. “He will deliver.”

President-elect Donald Trump and Elon Musk talk ring side during the UFC 309 event at Madison Square Garden on Nov. 16, 2024 in New York.

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There’s considerable uncertainty over the contents of a future Republican tax package and the fate of the EV credit, experts said.

Extending a slew of expiring income tax cuts and fulfilling various Trump campaign promises like slashing taxes on tips, Social Security benefits and overtime pay, for example, could cost about $7.8 trillion over 10 years, the Tax Foundation estimates.

Repealing all the IRA’s green energy tax credits, including the EV credit, would offset that cost by about $921 billion, it said.

Waiting is ‘too big of a gamble’

Laura, a 44-year-old living in Charlotte, North Carolina, has been looking to buy a plug-in hybrid for several years due to their environmental benefits and cost savings on gasoline.

She was getting ready to buy one thanks to the $7,500 EV credit, which made the vehicles more affordable, she said.

Laura, who asked not to use her last name, is now rushing to buy a 2025 Chrysler Pacifica Hybrid by year’s end because the credit might go away. To wait and buy in 2025 is “too big of a gamble” given Trump’s antipathy toward the EV credit, she said.

Local car dealers have informed Laura that she qualifies for the full $7,500 credit, which carries some restrictions depending on car model and buyers’ income, for example.

There’s no question there’s real risk in the EV credit going away.

Jamie Wickett

partner at law firm Hogan Lovells

However, dealers in her area don’t have many vehicles available right now, she said — and have told her that’s because consumers are scrambling to buy EVs in case the tax break disappears.

Dealers are hopeful they’ll have more inventory in the coming weeks, she said.

Laura said she wouldn’t buy the car without the tax credit.

“If it’s not going to be in by the end of December 2024, then that changes everything [for me],” she said.

She fears Trump and Republicans on Capitol Hill might try to claw back the $7,500 tax credit retroactively, for any consumers who get an EV in 2025 or beyond.

The irony is their “complete disdain for the tax credit” is what prompted her to try to get an EV more rapidly, she said.

Take advantage of a ‘known entity’

“I would encourage consumers to take advantage of the tax credit while it’s a known entity,” said Ingrid Malmgren, senior policy director at Plug In America, a group that advocates for the transition to EVs.

Most consumers have opted to get the credit as a discount at the point of sale, according to the U.S. Treasury Department. The car dealer essentially issues an advance tax credit to consumers, and the Treasury then refunds that advance payment.

Consumers who sign a lease agreement by year’s end would be able to lock in their savings contractually over a multiyear lease term, even though the term would overlap with Trump’s presidency, Malmgren said.

But look over the agreement terms. One caveat might be if a dealer were to write a clause into the lease contract stipulating that if the tax credit were denied then the consumer’s monthly lease payments would increase, Wickett said.

He expects Republicans to pass a tax package by the end of 2025. In the most likely scenario, such a law would probably phase out the federal EV credit in 2026 or 2027, instead of turning off the spigot retroactively for all 2025 purchases, Wickett said.

“No one knows for sure,” he said. “But I think it’s fairly clear the Republicans are going to find a way to pass a major tax bill.”

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Personal Finance

Trump plan to freeze funding stymies Biden-era energy rebates for consumers

Published

2 hours ago

February 26, 2025

Business Finance News

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Some states have stopped disbursing funds to consumers via Biden-era rebate programs tied to home energy efficiency, due to a Trump administration freeze on federal funding enacted in January.

The Inflation Reduction Act, passed in 2022, had earmarked $8.8 billion of federal funds for consumers through two home energy rebate programs, to be administered by states, territories and the District of Columbia.

Arizona, Colorado, Georgia and Rhode Island — which are in various phases of rollout — have paused or delayed their fledgling programs, citing Trump administration policy.

The White House on Jan. 27 put a freeze on the disbursement of federal funds that conflict with President Trump’s agenda — including initiatives related to green energy and climate change — as a reason for halting the disbursement of rebate funds to consumers.

That fate of that freeze is still up in the air. A federal judge issued an order Tuesday that continued to block the policy, for example. However, it appears agencies had been withholding funding in some cases in defiance of earlier court rulings, according to ProPublica reporting.

In any event, the freeze — or the threat of it — appears to be impacting state rebate programs.

“Coloradans who would receive the Home Energy Rebate savings are still locked out by the Trump administration in the dead of winter,” Ari Rosenblum, a spokesperson for the Colorado Energy Office, said in an e-mailed statement.

The U.S. Department of Energy and the White House didn’t return a request for comment from CNBC on the funding freeze.

In some states, rebates are ‘currently unavailable’

Consumers are eligible for up to $8,000 of Home Efficiency Rebates and up to $14,000 of Home Electrification and Appliance Rebates, per federal law.

The rebates defray the cost of retrofitting homes and upgrading appliances to be more energy efficient. Such tweaks aim to cut consumers’ utility bills while also reducing planet-warming carbon emissions.

California, the District of Columbia, Maine, Michigan, New Mexico, New York, North Carolina and Wisconsin had also launched phases of their rebate programs in recent months, according to data on an archived federal website.

All states and territories (except for South Dakota) had applied for the federal rebate funding and the U.S. Department of Energy had approved funding for each of them.

The Arizona Governor’s Office of Resiliency said its Home Energy Rebates programs would be paused until federal funds are freed up.

“Due to the current federal Executive Orders, memorandums from the White House Office of Management and Budget, and communications from the U.S. Department of Energy, funding for all Efficiency Arizona programs is currently unavailable,” it said in an announcement Friday.

Rhode Island paused new applications as of Jan. 27 due to “current uncertainty” with Inflation Reduction Act funding and executive orders, according to its Office of Energy Resources.

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The Georgia Environmental Finance Authority launched a pilot program for the rebates in fall 2024. That program is ongoing, a spokesperson confirmed Monday.

However, the timeline for a full program launch initially planned for 2025 “is delayed until we receive more information from the U.S. Department of Energy,” the Georgia spokesperson explained in an e-mail.

However, not all states have pressed the pause button: It appears Maine is still moving forward, for example.

“The program remains open to those who are eligible,” Afton Vigue, a spokesperson for the Maine Governor’s Energy Office, said in an e-mail.

The status of rebates in the eight other states and districts to have launched their programs is unclear. Their respective energy departments or governor’s offices didn’t return requests for comment.

‘Signs of an interest’

While the Trump administration on Jan. 29 rescinded its memo ordering a freeze on federal grants and loans — two days after its initial release — the White House said the freeze nonetheless remained in full force.

Democratic attorneys general in 22 states and the District of Columbia filed a lawsuit against the Trump administration, claiming the freeze is unlawful. The White House has claimed it is necessary to ensure spending aligns with Trump’s presidential agenda.

David Terry, president of the National Association of State Energy Officials, said he is optimistic the rebate funding will be released to states soon.

“For these two particular programs, I do not think [the freeze] will stymie the programs,” Terry said. “I see signs of an interest in moving them forward and working with the states to implement them.”

Personal Finance

Social Security Fairness Act benefit increases to arrive this spring

Published

4 hours ago

February 26, 2025

Business Finance News

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Lump sum payments to begin arriving in February

In a new update released on Tuesday, the SSA said it will begin issuing retroactive payments in February. Most people will receive the one-time payment by the end of March, according to the agency.

The SSA plans to process the increase to monthly benefits starting in April.

The new timeline “supports President Trump’s priority to implement the Social Security Fairness Act as quickly as possible,” Social Security acting commissioner Lee Dudek said in a statement.

“The agency’s original estimate of taking a year or more now will only apply to complex cases that cannot be processed by automation,” Dudek said. “The American people deserve to get their due benefits as quickly as possible.”

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Among those affected include some teachers, firefighters and police officers in certain states; federal employees who are covered by the Civil Service Retirement System and people who worked under foreign social security systems, according to the Social Security Administration.

What affected beneficiaries should know

Retroactive payments, which most people should receive by the end of March, will be deposited directly into bank accounts on file with the Social Security Administration.

All affected beneficiaries should receive a notice by mail from the Social Security Administration with details about their retroactive payment and new benefit amount. Those notices should come two to three weeks after the retroactive payments, according to the agency.

If your direct deposit information or current mailing address are up to date with the agency, no action is needed, according to the agency. If you want to double check the information the agency has on file, you may sign into your personal online account or call the agency.

If you want to ask about the status of your retroactive payment, the Social Security Administration urges you to hold off until April.

Beneficiaries should also wait until after they have received their April monthly check before contacting the agency to ask about their new benefit amount.

Personal Finance

The average IRS tax refund is 32.4% lower this season. Here’s why

Published

1 day ago

February 25, 2025

Business Finance News

The average tax refund is 10.4% lower than last year according to the latest Internal Revenue Service data, and inflation is taking more of those dollars.

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The average tax refund this year is down 32.4% compared to last year, according to early filing data from the IRS.

Tax season opened on Jan. 27, and the average refund amount was $2,169 as of Feb. 14, down from $3,207 about one year prior, the IRS reported on Friday. That figure reflects current-year refunds only.

However, the Feb. 14 filing data doesn’t include refunds receiving the earned income tax credit or additional child tax credit, which aren’t issued before mid-February, the IRS noted. The previous year’s filing data included tax returns claiming these credits. The value of these tax breaks can be substantial, even resulting in five-figure refunds, in some cases.

Typically, you can expect a refund when you overpay taxes throughout the year via paycheck withholdings or quarterly estimated payments. By comparison, there’s generally a tax bill when you haven’t paid enough.

Filing season numbers will ‘even out’

Although the average refund is currently smaller, “historically, filing season numbers even out as more tax returns come in,” according to the agency.

As of Feb. 14, the IRS received roughly 33 million individual tax returns of the more than 140 million it expects before the April 15 deadline.

As of Dec. 27, 2024, the average tax refund for the 2024 season was $3,138, compared to $3,167 in late December 2023.

‘Don’t call the IRS’ for refund updates

The latest filing statistics come amid mass layoffs for the agency as Elon Musk’s so-called Department of Government Efficiency, or DOGE, continues to cull the federal workforce.

It’s unclear exactly how the staffing reduction could impact future taxpayer service. But experts recommend double-checking returns for accuracy to avoid extra touch points with the agency.

“Don’t call the IRS looking for your refund,” said Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals.

You can check the status of your refund via the agency’s “Where’s My Refund?” tool or the IRS2Go app, which is “available 24 hours a day,” O’Saben said.

Typically, the agency issues refunds within 21 days of a return’s receipt. But some returns require “additional review,” which can extend the timeline, according to the IRS.