Most of the credits don’t actually change behavior. About 70 percent of EV buyers would have purchased the car even without the tax credit.

The Congressional Research Service just dropped a memo that quietly cuts through the noise. Its latest two-page “In Focus” on electric-vehicle tax credits shows what critics have been saying for years: EVs are a good innovation, but subsidies are bad policy. They are regressive, wasteful, and their environmental benefits aren’t as big as you think. It is relevant since the One Big Beautiful Bill Act terminated them.

So first, most of the credits don’t actually change behavior. The CRS highlights research showing that about 70 percent of EV buyers would have purchased the car even without the tax credit. In those cases, the subsidy simply transfers taxpayer dollars to people who were already inclined to buy. Economists call this an “inframarginal subsidy,” and it means the policy has a much lower impact on vehicle electrification than the sticker price suggests. Here are some of the results and research on this:

Studies of the IRA-reformed credits suggest that roughly 7 out of 10 EV tax credit recipients are inframarginal. Allcott et al. (2024) estimate an inframarginal share of 67% to 77%; the Congressional Budget Office (CBO) (2023) estimates a share of 68%; and shortly after the IRA’s passage, the Brookings Institution (2023) projected that 73% of EV tax credit recipients would be inframarginal.

These estimates align with studies of other EV tax credit programs. Xing et al. (2021) and Tal and Nicholas (2016) estimate that for the previous version of the CVC—that which predated the IRA—70% and 71.5%, respectively, of tax credit recipients were inframarginal. Similarly, Chandra et al. (2010) found that in Canada, 74% of consumers receiving a rebate for hybrid vehicle purchases would have bought a hybrid without the rebate. Finally, when the German government abruptly and unexpectedly eliminated a $4,900 EV subsidy, year-over-year EV sales fell 26.6%, consistent with roughly three-quarters of subsidy recipients being inframarginal.

This isn’t surprising, as it is the case with most subsidies.

Then there’s the environmental case. Yes, electric vehicles produce fewer lifecycle emissions than gas-powered cars do. However, the credits often merely redirect consumers by pushing them away from hybrids and other efficient gas vehicles they would have otherwise purchased. In some cases, the credit simply induces people who weren’t planning to buy any car at all to buy an EV. The net result? Far fewer emission reductions per subsidy dollar than advertised.

The distributional picture is even uglier. Economists Severin Borenstein and Lucas Davis, using tax-filing data, found that between 2009 and 2021, the top 5 percent of households captured half of all EV tax-credit benefits. The bottom 60 percent got less than 3 percent. The Inflation Reduction Act tweaked the rules, but as the CRS dryly notes, loopholes, like the one for leased EVs, still leave plenty of room for wealthy households to cash in.

And then there’s the cost. The One Big Beautiful Bill Act repeals the EV credits, saving $190 billion over a decade. According to the Congressional Research Service, eliminating the EV subsidy imposes fewer environmental costs per dollar of deficit reduction than does phasing out subsidies for clean electricity. Translation: If you want deficit reduction without blowing up climate goals, EV credits were the low-hanging fruit.

So, well done, Congress. Please don’t bring them back.