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U.S. government approves $2,500 federal tax credit for electric bikes and motorcycles

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The Senate Finance Committee has approved a federal tax on electric bikes and motorcycles, reports The Detroit News.

The amendment, which was introduced by Sen. Ron Wyden, D-Oregon, would give consumers a 10 percent federal tax credit, up to a maximum of $2,500 on electric bikes and motorcycles. Wyden introduced the amendment to reinstate a previous tax breaks that was approved in 2009 as part of the $800 billion stimulus package, but expired at the beginning of 2012. The finance committee approved the amendment by a voice vote as part of a broader package of tax measures after Sen. Orrin Hatch, R-Utah, questioned whether such a provision could be undertaken given the fragile economic state of the country.

The tax breaks are expected to cost about $15 million over two years and, according to Wyden, are deemed necessary with “thousands of jobs on the line.” Should the bill pass, it would also end an existing tax credit currently enjoyed on golf carts that are unable/unlawful to drive on public highways.

The proposed measure is believed to help create U.S. jobs and foster a more competitive electric bicycle industry — specifically in the booming overseas e-bike market where about 25 million were sold in China last year, easily dwarfing the less than 100,000 sold in the U.S. during the same period.

While it’s clear the American e-bike and electric motorcycle industry pales in comparison to markets such as China, major auto and motorcycle manufactures have indeed begun to enter the e-bike arena. Wyden’s home state of Oregon is home to Brammo, a pioneer in the EV bike market and creators of the Brammo Empulse, which we had a chance to get up close and person with last month.

Of course, federal tax credits for electric drivetrain vehicles are nothing new. Currently both state and federal incentives exist for consumers wishing to purchase battery-powered vehicles such as the Nissan Leaf, Ford Focus Electric, and Tesla Model S among many others. Plug-in hybrids are also included, with cars like the Chevrolet Volt eligible for $7,500 federal tax credit.