S. 881 - Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act

118TH CONGRESS
1ST SESSION

S. 881

To amend the Internal Revenue Code of 1986 to provide
a credit for the purchase of certain new electric bicycles.

IN THE SENATE OF THE UNITED STATES

MARCH 21, 2023

Mr. SCHATZ (for himself and Mr. MARKEY) introduced the following bill;
which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide a credit for the purchase of certain new electric bicycles.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Electric Bicycle Incentive Kickstart for the Environment Act" or as the "E-BIKE Act".

SEC. 2. CREDIT FOR CERTAIN NEW ELECTRIC BICYCLES.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:

“SEC. 36C. ELECTRIC BICYCLES.

“(a) ALLOWANCE OF CREDIT. — In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the cost of each qualified electric bicycle placed in service by the taxpayer during such taxable year.

“(b) LIMITATIONS. —

“(1) LIMITATION ON COST PER BICYCLE TAKEN INTO ACCOUNT. — The amount taken into account under subsection (a) as the cost of any qualified electric bicycle shall not exceed $5,000.

“(2) LIMITATION ON NUMBER OF BICYCLES. — In the case of any taxpayer for any taxable year, the number of qualified electric bicycles taken into account under subsection (a) shall not exceed the excess (if any) of —

“(A) 1 (2 in the case of a joint return), reduced by

“(B) the aggregate number of qualified electric bicycles taken into account by the taxpayer under subsection (a) for the 2 preceding taxable years.

“(3) PHASEOUT BASED ON INCOME. —

“(A) PHASEOUT BASED ON MODIFIED ADJUSTED GROSS INCOME. — The credit allowed under subsection (a) shall be reduced by $100 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds —

“(i) $300,000 in the case of a joint return or a surviving spouse (as defined in section 2(a)),

“(ii) $225,000 in the case of a head of household (as defined in section 2(b)), and

“(iii) $150,000 in the case of a taxpayer not described in clause (i) or (ii).

“(B) SPECIAL RULE FOR MODIFIED ADJUSTED GROSS INCOME TAKEN INTO ACCOUNT. — The modified adjusted gross income of the taxpayer that is taken into account for purposes of subparagraph (A) shall be the lesser of —

“(i) the modified adjusted gross income for the taxable year with respect to which the credit is claimed, or

“(ii) the modified adjusted gross income for the immediately preceding taxable year.

“(C) MODIFIED ADJUSTED GROSS INCOME. — For purposes of subparagraph (A), the term 'modified adjusted gross income' means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

“(c) QUALIFIED ELECTRIC BICYCLE. — For purposes of this section —

“(1) IN GENERAL. — The term 'qualified electric bicycle' means a bicycle or tricycle —

“(A) the original use of which commences with the taxpayer,

“(B) which is acquired for use by the taxpayer and not for resale,

“(C) which is not property of a character subject to an allowance for depreciation or amortization in the hands of the taxpayer,

“(D) which is made by a qualified manufacturer and is labeled with the qualified vehicle identification number assigned to such bicycle or tricycle by such manufacturer,

“(E) with respect to which the aggregate amount paid for such acquisition does not exceed $8,000,

“(F) which is a class 1 electric bicycle or tricycle, a class 2 electric bicycle or tricycle, or a class 3 electric bicycle or tricycle,

“(G) which is equipped with —

“(i) fully operable pedals,

“(ii) a saddle or seat for the rider, and

“(iii) an electric motor of less than 750 watts which is designed to provide assistance in propelling the bicycle or tricycle and —

“(I) does not provide such assistance if the bicycle or tricycle is moving in excess of 20 miler per hour, or

“(II) if such motor only provides such assistance when the rider is pedaling, does not provide such assistance if the bicycle or tricycle is moving in excess of 28 miles per hour,

“(H) which is not equipped with any motor other than the motor described in subparagraph (G)(iii),

“(I) which is not capable of exceeding the speed limitation in paragraph (2) by means of any electronic switch, setting or software modification provided or made available by the manufacturer, and

“(J) which has a drive system that has been certified by an accredited laboratory to Underwriters Laboratory (UL) standard UL 2849, or a battery that has been certified to any of the battery safety standards listed in such standard UL 2849 or such other drive system or battery safety standard as may be recognized by the United States Consumer Product Safety Commission.

“(2) CLASS 1 ELECTRIC BICYCLE OR TRICYCLE. — The term 'class 1 electric bicycle or tricycle' means a two- or three-wheeled vehicle equipped with an electric motor that provides assistance only when the rider is pedaling, that is not capable of providing assistance when the speed of the vehicle exceeds 20 miles per hour, and that is not a class 3 electric bicycle or tricycle.

“(3) CLASS 2 ELECTRIC BICYCLE OR TRICYCLE. — The term 'class 2 electric bicycle or tricycle' means a two- or three-wheeled vehicle equipped with an electric motor that may be used to propel the vehicle without the need of any additional assistance, and that is not capable of providing assistance when the speed of the vehicle exceeds 20 miles per hour.

“(4) CLASS 3 ELECTRIC BICYCLE OR TRICYCLE. — The term 'class 3 electric bicycle or tricycle' means a two- or three-wheeled vehicle equipped with an electric motor that provides assistance only when the rider is pedaling, and that is not capable of providing assistance when the speed of the vehicle exceeds 28 miles per hour.

“(d) SPECIAL RULE FOR BICYCLES USED BY AN INDIVIDUAL IN A TRADE OR BUSINESS. — In the case of any bicycle or tricycle with respect to which the taxpayer elects (at such time and in such manner as the Secretary may provide) the application of this subsection —

“(1) subsections (c)(1)(C) and (f)(2) shall not apply with respect to such bicycle or tricycle, and

“(2) no deduction (including any deduction for depreciation or amortization) or credit (other than the credit allowed under this section) shall be allowed for the cost of such bicycle or tricycle.

“(e) VIN NUMBER REQUIREMENT. —

“(1) IN GENERAL. — No credit shall be allowed under subsection (a) with respect to any qualified electric bicycle unless the taxpayer includes the qualified vehicle identification number of such bicycle on the return of tax for the taxable year.

“(2) QUALIFIED VEHICLE IDENTIFICATION NUMBER. — For purposes of this section, the term 'qualified vehicle identification number' means, with respect to any qualified electric bicycle, the vehicle identification number assigned to such bicycle by a qualified manufacturer pursuant to the methodology referred to in paragraph (3)(A).

“(3) QUALIFIED MANUFACTURER. — For purposes of this section, the term 'qualified manufacturer' means any manufacturer of qualified electric bicycles which enters into an agreement with the Secretary which provides that such manufacturer will —

“(A) assign a vehicle identification number to each qualified electric bicycle produced by such manufacturer utilizing a methodology that will ensure that such number (including any alphanumeric) is unique to such bicycle (by utilizing numbers or letters which are unique to such manufacturer or by such other method as the Secretary may provide),

“(B) label such bicycle with such number in such manner as the Secretary may provide, and

“(C) make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the vehicle identification numbers so assigned and including such information as the Secretary may require with respect to the qualified electric bicycle to which such number was so assigned.

“(f) SPECIAL RULES. —

“(1) BASIS REDUCTION. — For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed.

“(2) NO DOUBLE BENEFIT. — The amount of any deduction or other credit allowable under this chapter for a qualified electric bicycle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such bicycle.

“(3) PROPERTY USED OUTSIDE UNITED STATES NOT QUALIFIED. — No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).

“(4) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any credit allowable under subsection

(a) with respect to any property which ceases to be property eligible for such credit.

“(5) ELECTION NOT TO TAKE CREDIT. — No credit shall be allowed under subsection (a) for any qualified electric bicycle if the taxpayer elects to not have this section apply to such bicycle.

“(g) TREATMENT OF CERTAIN POSSESSIONS. —

“(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — The Secretary shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section (determined without regard to this subsection). Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.

“(2) PAYMENTS TO OTHER POSSESSIONS. — The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession.

The preceding sentence shall not apply unless the respective possession has a plan which has been approved by the Secretary under which such possession will promptly distribute such payments to its residents.

“(3) MIRROR CODE TAX SYSTEM; TREATMENT OF PAYMENTS. — Rules similar to the rules of paragraphs (3), (4), and (5) of section 21(h) shall apply for purposes of this section.

“(h) TRANSFER OF CREDIT. —

“(1) IN GENERAL. — Subject to such regulations or other guidance as the Secretary determines necessary or appropriate, if the taxpayer who acquires a qualified electric bicycle is an individual and elects the application of this subsection with respect to such qualified electric bicycle, the credit which would (but for this subsection) be allowed to such taxpayer with respect to such qualified electric bicycle shall be allowed to the eligible entity specified in such election (and not to such taxpayer).

“(2) ELIGIBLE ENTITY. — For purposes of this paragraph, the term 'eligible entity' means, with respect to the qualified electric bicycle for which the credit is allowed under subsection (a), the retailer which sold such qualified electric bicycle to the taxpayer and has —

“(A) subject to paragraph (4), registered with the Secretary for purposes of this paragraph, at such time, and in such form and manner, as the Secretary may prescribe,

“(B) prior to the election described in paragraph (1) and no later than at the time of such sale, disclosed to the taxpayer purchasing such qualified electric bicycle —

“(i) the retail price,

“(ii) the value of the credit allowed or other incentive available for the purchase of such qualified electric bicycle,

“(iii) all fees associated with the purchase of such qualified electric bicycle, and

“(iv) the amount provided by the retailer to such taxpayer as a condition of the election described in paragraph (1),

“(C) made payment to such taxpayer (whether in cash or in the form of a partial payment or down payment for the purchase of such qualified electric bicycle) in an amount equal to the credit otherwise allowable to such taxpayer, and

“(D) with respect to any incentive otherwise available for the purchase of a qualified electric bicycle for which a credit is allowed under this section, including any incentive in the form of a rebate or discount provided by the retailer or manufacturer, ensured that —

“(i) the availability or use of such incentive shall not limit the ability of a taxpayer to make an election described in paragraph (1), and

“(ii) such election shall not limit the value or use of such incentive.

“(3) TIMING. — An election described in paragraph (1) shall be made by the taxpayer not later than the date on which the qualified electric bicycle for which the credit is allowed under subsection (a) is purchased.

“(4) REVOCATION OF REGISTRATION. — Upon determination by the Secretary that a retailer has failed to comply with the requirements described in paragraph (2), the Secretary may revoke the registration (as described in subparagraph (A) of such paragraph) of such retailer.

“(5) TAX TREATMENT OF PAYMENTS. — With respect to any payment described in paragraph (2)(C), such payment —

“(A) shall not be includible in the gross income of the taxpayer, and

“(B) with respect to the retailer, shall not be deductible under this title.

“(6) APPLICATION OF CERTAIN OTHER REQUIREMENTS. — In the case of any election under paragraph (1) with respect to any qualified electric bicycle —

“(A) the amount of the reduction under subsection (b) shall be determined with respect to the modified adjusted gross income of the taxpayer for the taxable year preceding the taxable year in which such qualified electric bicycle was acquired (and not with respect to such income for the taxable year in which such qualified electric bicycle was acquired),

“(B) the requirements of paragraphs (1) and (2) of subsection (f) shall apply to the taxpayer who acquired the qualified electric bicycle in the same manner as if the credit determined under this section with respect to such qualified electric bicycle were allowed to such taxpayer, and

“(C) subsection (f)(5) shall not apply.

“(7) ADVANCE PAYMENT TO REGISTERED RETAILERS. —

“(A) IN GENERAL. — The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any qualified electric bicycles sold by such entity for which an election described in paragraph (1) has been made.

“(B) EXCESSIVE PAYMENTS. — Rules similar to the rules of section 6417(c)(6) shall apply for purposes of this paragraph.

“(8) RETAILER. — For purposes of this subsection, the term 'retailer' means a person engaged in the trade or business of selling qualified electric bicycles in a State, the District of Columbia, the Commonwealth of Puerto Rico, or any other territory or possession of the United States.".

(b) CONFORMING AMENDMENTS. —

(1) Section 1016(a) of the Internal Revenue Code of 1986 is amended by striking "and" at the end of paragraph (37), by striking the period at the end of paragraph (38) and inserting ", and", and by adding at the end the following new paragraph:

“(39) to the extent provided in section 36C(f)(1).".

(2) Section 6211(b)(4)(A) of such Code is amended by inserting "36C," after "36B,".

(3) Section 6213(g)(2) of such Code is amended —

(A) in subparagraph (U), by striking "and" at the end,

(B) in subparagraph (V), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

“(W) an omission of a correct vehicle identification number required under section 36C(e) (relating to electric bicycles credit) to be included on a return.".

(4) Section 6501(m) of such Code is amended by inserting "36C(f)(5)," after "35(g)(11),".

(5) Section 1324(b)(2) of title 31, United States Code, is amended by inserting "36C," after "36B,".

(c) CLERICAL AMENDMENT. — The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

“Sec. 36C. Electric bicycles.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

(e) TREASURY REPORT. — Not later than 3 years after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall make publicly available a written report specifying the number of taxpayers claiming the credit allowed under section 36C of the Internal Revenue Code of 1986 (as added by this section) and the aggregate dollar amount of such credits so allowed. Such information shall be stated separately for taxable years beginning in 2023 and 2024, and shall be stated separately with respect to each such years with respect to taxpayers in each of the income brackets to which section 1 of such Code applies.