What experts say about how valuable The Inflation Reduction Act's green subsidies will be
. By surveying adults’ preferences of different incentives—effectively simulating the buying process in a variety of scenarios—he found that a $7,500 cash rebate lost value when it was offered in the form of a tax credit. This is because rebates immediately lower the cost of the purchase. Tax credits, on the other hand, require consumers to shoulder the full cost until tax time, at which point they risk not getting all or any of it, should they owe less than $7,500 in taxes.
The $7,500 subsidy in Helveston’s study isn’t entirely hypothetical. Prior to the Inflation Reduction Act, car buyers could receive up to that amount as a tax credit when they purchased a new electric vehicle. That program sidelined consumers who couldn’t afford the upfront cost.
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