In a surprise move, the House of Representatives voted to provide an additional $2 billion for the “cash for clunkers” program – otherwise known as General Motors welfare program. It is unclear if the Senate will be so generous and take up the measure.
The “cash for clunkers” provision gives a cash incentive for individuals and businesses to trade in older gas-hogging vehicles for new, more fuel-efficient ones. The incentive comes in the form of a voucher of $3,500 or $4,500 depending on the type of vehicle traded in and the fuel efficiency of the vehicle purchased. Different rules apply to passenger cars, and various categories of trucks. The new vehicle must be purchased between July 1 and November 1 of 2009. The $3,500 or $4,500 voucher is not treated as gross income for purposes of the Code, or for federal or state assistance programs.
A total of $1 billion was allocated to the trade-in initiative by P.L. 111-32, but the interest in the initiative was so strong that the money was used up almost immediately.
Eligible trade-in vehicles are those that at trade-in time: are in drivable condition; have been continuously insured and registered to the same owner for at least one year; were manufactured less than 25 years before the trade-in date; and in the case of an auto, achieve a combined fuel economy of 18 mpg or less. A single person may get only one trade-in voucher and only one voucher is available for joint registered owners of a single eligible trade-in vehicle.