Casten, Matsui Reintroduce Bill to Incentivize Efficient Vehicle Purchases
Washington, D.C. — Today, U.S. Congressman Sean Casten (IL-06) and Congresswoman Doris Matsui (CA-07) reintroduced the Vehicle Energy Performance Act (VEPA) to incentivize consumers to purchase new vehicles with better-than-average energy performance.
“Roughly one-quarter of all greenhouse gas emissions from the United States come from the transportation sector, especially cars and trucks,” said Rep. Casten. “It’s more important than ever to incentivize vehicles that not only help reduce those emissions, but can also go the extra mile and extend trips between visits to the gas pump. This legislation is a win-win for consumers hoping to save money on fuel and help the environment at the same time.”
“The Trump Administration is trying to drag this country back to the 1970s by gutting our vehicle pollution and fuel efficiency standards, but America isn’t going back,” said Congresswoman Matsui. “Now is the time to demand more from our cars. The most efficient gas vehicles on the market are getting more than 50 miles to the gallon, and electric vehicles can get the electricity equivalent of more than 130mpg. However, many Americans are getting less than 25 miles to the gallon and paying to fill up their tank twice as often. This bill would change the equation, incentivizing automakers to offer more and better fuel-efficient options, and that means more money in your pocket.”
The Vehicle Energy Performance Act of 2025 (VEPA) will establish a tax credit for new vehicles with higher-than-average energy performance and impose a fee on sales of new vehicles with lower-than-average energy performance. The tax credit will go to the consumer, while the fee will be imposed on the vehicle manufacturer.
Electric vehicles, hybrids, plug-in hybrids, and standard internal combustion engine cars will all be assessed by the same measure of performance.
This legislation generates cost savings on both ends for consumers. The tax credit creates financial incentives for consumers to purchase energy-efficient vehicles, and drivers spend less at the pump because of better fuel efficiency.
Text of the legislation can be found here.
How it Works
Under VEPA, by November 1 of each year, each vehicle manufacturer will report the “vehicle energy performance,” in miles per gallon-gasoline equivalent (MPGe), for each model sold in the United States during the Model Year (MY), and the number of vehicles of each model that it has sold that year. The use of MPGe as a metric is “technology neutral,” meaning that EVs, plug-in hybrids, hybrids, and standard internal combustion engine cars will all be assessed by the same measure of vehicle energy performance.
By December 1, 2026, and every year thereafter, the IRS will publish the median vehicle energy performance of vehicles sold and the vehicle energy performance of the best-performing vehicle during the previous model year. Vehicles with the best vehicle energy performance will get 100% of the $5000 credit, vehicles with the median vehicle energy performance will get $0, and every 1% above the median will increase the credit by approximately $50.
If the program were in place today, a buyer would receive a $5000 tax credit for a Hyundai Ioniq 6, almost $2000 for the Ford Lightning EV pickup truck, and over $1000 for the Toyota Prius hybrid.
Using the same data on median vehicle energy performance, vehicles with low vehicle energy performance will be subject to a fee of approximately $50 for every 1% below the median, with the largest fee estimated to be less than $1000. This fee will partly offset the cost to the Treasury of the tax credit.
Unlike the tax credit, which will go to the consumer, the fee will be paid by the manufacturer.
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