Tax Credits, Deductions and Exemptions

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Used Tesla Market Heats Up as Owners Sell to Protest Elon Musk

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Teslas that have been sold or traded in during the backlash against the company’s chief executive have become bargains on lots.For the last several months, Ken Harvey has been cultivating a budding side business for his Honda and Mazda dealerships in Northern California: selling used Teslas.A few times a month, Mr. Harvey picks up a few pre-owned Teslas at a local automobile auction and offers them for sale, often at surprisingly affordable prices, thanks to a $4,000 federal tax credit that customers get for purchasing used electric vehicles priced under $25,000. Some consumers who qualify for state incentives, he said, end up with used Model 3 sedans for well under $20,000 — less than half the cost of a new one.“We sold three in the last week, maybe 20 since the beginning of the year,” said Mr. Harvey, whose family owns four Honda dealerships and two Mazda franchises in Alameda County, a suburb of San Francisco where Tesla has a car plant.“We have three in stock now, and two are on the way,” he added. “They won’t stay around more than a few days.”Welcome to the flip side of the backlash against Elon Musk, Tesla’s chief executive and one of President Trump’s closest confidants — a thriving trade in used Teslas.The used Tesla business had been growing for years before Mr. Musk and Mr. Trump became close, but their bonhomie has turbocharged it.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Republicans Like to Cut Taxes. With Tariffs, Trump Is Raising Them.

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    President Trump’s tariffs are scrambling the Republican plan for the economy, long centered on tax cuts and growth.The Republican Party embarked this week on a haphazard experiment in economic policymaking, wagering that the United States can weather a monumental tax increase in the form of broad tariffs on imported goods as long as Congress also cuts taxes on income.It’s a mash-up that many investors, economists and even some G.O.P. lawmakers expect to be a failure.“I always think that with gambling, at least you have a chance of winning. This is worse than that,” Douglas Holtz-Eakin, a conservative economist who worked for former President George W. Bush, said. “This is betting with the mafia. You’re going to lose.”President Trump’s plan to charge at least a 10 percent tariff on nearly all imports into the United States — along with much higher rates on goods from many countries — is the culmination of his quest to force companies to manufacture domestically, even if it comes at the expense of a relatively strong economy. Because tariffs are a type of taxation, Mr. Trump’s plan is among the largest tax increases in decades, analysts say, a policy change that sent the stock market reeling, paralyzed corporate investment and shoved the economy closer to a recession.At the same time, Republicans on Capitol Hill are plowing forward with legislation that would lock in lower taxes for American individuals and companies. There’s diminishing hope among Republicans that those cuts can make up for drag created by the tariffs. Some of Mr. Trump’s allies and tax cut enthusiasts, like Stephen Moore, his former economic adviser, have been begging the president for “more tax cuts and less tariffs, please.”Of course, Mr. Trump and the White House argue that tariffs are not taxes on Americans, but rather on foreign companies that will have to lower their prices to maintain access to the U.S. market. Mainstream economists have consistently found that tariffs raise prices for American consumers and companies, including domestic manufacturers who import materials to turn into final products.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Clean Energy Was Lifting Manufacturing. Now Investment Is in Jeopardy.

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    With the Trump administration reversing support for low-carbon power, the business case for making wind, solar and electric vehicle parts gets weaker.American manufacturing has been in the doldrums for years, battered by high borrowing costs and a strong dollar, which makes exports less competitive. But there has been a bright spot: billions of dollars flowing into factory construction, signifying that a potential rebound in production and employment is around the corner.The flood of investment has been driven by two major categories of subsidies provided under the Biden administration. One offered incentives for the construction of several enormous semiconductor plants set to begin operation in the coming years. The other supercharged the production of equipment needed for renewable energy deployment.This second category is in jeopardy as the Trump administration and the Republican-led Congress seek to roll back support for low-carbon energy, including battery-powered vehicles, wind power and solar fields.One option to raise money to offset the cost of their desired tax cuts is truncating credits for renewable power generation.“If it ends up that the timeline for these credits is shortened, then the incentives to develop an onshore manufacturing facility obviously go down,” said Jeffrey Davis, a lawyer with White & Case who specializes in renewable energy incentives. “If you’re looking at the prospect of sales and revenue over a three-year period instead of an eight-year period, the manufacturing facility may not pencil out.”The Biden administration’s strategy relied on a push and a pull. First, push the supply of clean energy products through tax breaks, loans and direct grants to manufacturers. Equally important was pulling demand along: rebates for buying electric cars, tax credits for producing renewable power, and subsidies for states and individuals to install solar arrays. Companies contemplating manufacturing investments took both sides into account when planning where to build or expand a plant.Investment in Factories Has Been BoomingAmerica isn’t yet making more stuff, but it’s building more buildings to make more stuff — largely because of subsidies for clean energy and semiconductors.

    Figures for each quarter are shown at a seasonally adjusted annual rate, in chained 2017 dollars.Source: Bureau of Economic AnalysisBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    I.R.S. Commissioner to Quit as Trump Takes Office

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    Daniel Werfel, the commissioner of the Internal Revenue Service, told the agency’s employees that he would end his term early and step down on Monday as President-elect Donald J. Trump takes office.Mr. Trump has said he plans to nominate Billy Long, a former Republican congressman, to the role. Past presidents have treated the tax collector’s leader as a nonpartisan job that continues between administrations of different parties. President Biden chose Mr. Werfel, a former career civil servant and management consultant, to attempt a renaissance of the I.R.S., which Democrats have infused with billions in new funding that Republicans are now eager to cancel.In a message to employees, Mr. Werfel said he had decided to step down after he concluded that it was the best way to support the next administration. Douglas O’Donnell, a career civil servant at the I.R.S. who currently has the No. 2 job, will serve as the acting commissioner, Mr. Werfel said.“While leaving a job you love is never easy, I take comfort in knowing that the civil servant leaders and employees at the I.R.S. are the exact right team to effectively steward this organization forward until a new I.R.S. commissioner is confirmed,” he wrote.With more than 80,000 employees, the I.R.S. is a central part of the federal government, collecting nearly $5 trillion in tax revenue last fiscal year. With $60 billion in additional funding approved by Democrats, the agency has in recent years tried to beef up tax collection for wealthy Americans and update its antiquated technology systems.The I.R.S. has long been a villain to Republicans, who attack it as a political tool for Democrats. Mr. Long, Mr. Trump’s pick to lead the agency, has scant tax experience beyond promoting a pandemic-era tax credit for small businesses that the I.R.S. has tried to shut down because of abuse. Republicans have already canceled $20 billion of the $80 billion Democrats originally envisioned for the I.R.S., and they have frozen $20 billion more. More

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    What Did Trump’s Tax Cuts Do?

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    Economic upheaval caused by the pandemic has clouded analysts’ ability to understand the effects of the 2017 tax law. Republicans call it a huge success and want to extend it anyway.Seven years ago, when Republicans passed the most significant overhaul of the tax code in a generation, they were sure the law would supercharge investment, raise wages and shift the American economy into a higher gear.So did it?The answer, at least for now, is largely lost to history.A pandemic and a surge in inflation convulsed the global economy not long after the law passed in 2017, scrambling the data that analysts would have typically relied on to draw conclusions about whether the tax cuts helped the economy grow the way Republicans had promised.As a result, policymakers in Washington are now relying on only a partial understanding of the law’s past as they weigh committing roughly $5 trillion toward continuing it.“Basically, from 2020 the data is kind of useless,” said Alan Auerbach, an economics professor at the University of California, Berkeley, who counts Kevin Hassett, a top economic adviser to President-elect Donald J. Trump, among his former students.Economists have focused on just two years before the coronavirus pandemic, 2018 and 2019, to measure the law’s consequences for the most important economy in the world. But that’s a limited window for trying to discern whether the tax cuts prompted a cycle of investment and growth that can take years to play out.“In terms of looking at longer-run effects, pretty much just forget about it,” Mr. Auerbach said. “There’s just no way to control for the effects of Covid.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump’s Plans to Scrap Climate Policies Has Unnerved Green Energy Investors

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    President-elect Donald J. Trump is expected to roll back many of the rules and subsidies that have attracted billions of dollars from the private sector to renewable energy and electric vehicles.Money is the mother’s milk of politics, but the outcome of elections also determines where it flows — and last month’s was especially crucial for the energy industry.Clean investment — including renewable energy as well as the manufacturing of electric vehicles, batteries and solar panels — has boomed since the passage of the 2022 Inflation Reduction Act, championed by President Biden. In the third quarter of 2024, it reached a record $71 billion, according to a tracker maintained by the Rhodium Group, an energy-focused research firm, and M.I.T.The big question looming now on Wall Street: Will President-elect Donald J. Trump, who called Mr. Biden’s policies the “green new scam” during the campaign, pull back enough of those subsidies and regulations to meaningfully change the economics of investing in decarbonization?Market reactions right after the election seemed clear. Clean energy stocks dropped sharply, while shares of oil companies bounced, indicating a divergent view of how the two sectors will fare in the coming years.Near the top of Mr. Trump’s agenda next year is extending his 2017 tax cuts. He will most likely need to reduce spending elsewhere to do that. Clean energy tax credits — worth about $350 billion over just the next three years, according to the Congressional Joint Committee on Taxation — would be a tempting target. The more those subsidies are pared, the more projects would no longer make financial sense.President Biden has championed the 2022 Inflation Reduction Act and other policies designed to address climate change and spur investment in cleaner forms of energy.Kenny Holston/The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Trump’s Tax Cuts and Tariffs Could Turn Into Law

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    Republicans are juggling complex political and tactical questions as they plan their congressional agenda next year.Republicans are starting to sketch out how to translate President-elect Donald J. Trump’s economic agenda into law, putting plans in place to bypass Democrats and approve multiple bills reshaping the nation’s tax and spending policies along party lines.With total control of Washington, Republicans have the rare — and often fleeting — opportunity to leave a lasting mark on federal policy. Some in the party are hoping to tee up big legislation for early next year and capitalize on Mr. Trump’s first 100 days.Much of the early planning revolves around the sweeping tax cuts the party passed and Mr. Trump signed into law in 2017, many of which will expire at the end of next year. Key Republicans are holding meetings about how to maneuver a bill extending the tax cuts through the Senate, while others are consulting economists for ideas to offset their roughly $4 trillion cost.Several questions loom over the Republican effort. They range from how fast the party should move next year to deeper political disagreements over which tax and spending policies to change. The overall cost of the legislation is a central preoccupation at a time of rising deficits. And whatever Republicans put together will most likely become a magnet for other issues the party has prioritized, including immigration.Here’s what to expect.A Difficult ProcessMost legislation needs a supermajority of 60 votes to pass the Senate. But for bills focused on taxes and spending, lawmakers can turn to a process called budget reconciliation that requires only a regular majority of 51 votes in the Senate.Reconciliation is a powerful but cumbersome tool. Its rules prevent lawmakers from passing policy changes unrelated to the budget, and lawmakers are only allowed to use reconciliation a limited number of times per year. Republicans could also raise the debt limit through the process.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump’s Win Shows Limits of Biden’s Industrial Policy

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    When President Biden addressed the nation this week after a gutting election, his reflections on his economic legacy offered a glimpse into why Democrats were resoundingly defeated.The efforts by the Biden-Harris administration to reshape American manufacturing were the most ambitious economic plans in a generation, but most voters had yet to see the fruits of those policies.“We have legislation we passed that’s only now just really kicking in,” Mr. Biden said, explaining that a “vast majority” of the benefits from federal investments that his administration made would be felt over the next decade.Legislation enacted by the Biden-Harris administration was designed to pump hundreds of billions of dollars into the United States economy to develop domestic clean energy and semiconductor sectors. The investments were likened to a modern-day New Deal that would make American supply chains less reliant on foreign adversaries while creating thousands of jobs, including for workers without a college degree.But anger over more immediate and tangible economic issues — including rapid inflation and high mortgage rates — dwarfed optimism about factories that had yet to be built. That reality helped topple Vice President Kamala Harris’s campaign and showed the limits of industrial policy as a winning political strategy.In the days since Mr. Trump’s victory, current and former Biden administration officials have been grappling both privately and publicly with why their economic strategy did not prove to be more popular. They have comforted themselves with the fact that inflation has led to the defeat of incumbent leaders around the world, although most of those governments were also struggling with weak economies, whereas growth in the United States remains robust.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Elon Musk Might Use His Pull With Trump to Help Tesla

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    Although Donald Trump has opposed policies that favor electric cars, if he becomes president he could ease regulatory scrutiny of Tesla or protect lucrative credits and subsidies.Former President Donald J. Trump has promised, if he is re-elected, to do away with Biden administration policies that encourage the use and production of electric cars. Yet one of his biggest supporters is Elon Musk, the chief executive of Tesla, which makes nearly half the electric vehicles sold in the United States.Whether or not Mr. Trump would carry out his threats against battery-powered cars and trucks, a second Trump administration could still be good for Tesla and Mr. Musk, auto and political experts say.Mr. Musk has spent more than $75 million to support the Trump campaign and is running a get-out-the-vote effort on the former president’s behalf in Pennsylvania. That will almost surely earn Mr. Musk the kind of access he would need to promote Tesla.But Mr. Musk would also have to confront a big gap between his Washington wish list and Mr. Trump’s agenda.While Mr. Musk rarely acknowledges it, Tesla has collected billions of dollars from programs championed by Democrats like President Biden that Mr. Trump and other Republicans have vowed to dismantle.In Michigan, a battleground state and home to many auto factories, the Trump campaign has run ads that claim that Vice President Kamala Harris, the Democratic presidential nominee, wants to “end all gas-powered cars” — a position that she does not hold.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More