The Senate Finance Committee approved a tax credit worth 10 percent of the price of electric bikes and motorcycles, up to a maximum of $2,500.
The Senate hopes that the tax credit will help improve sales in the electric bike industry within the United States.
Electric bikes and motorcycles have been without a federal purchase incentive since the beginning of 2012, when the credit originally introduced in 2009 expired.
Comparatively, about 25 million electric bikes were sold in China compared to fewer than 100,000 in the United States. The tax credit will cost $15 million over two years and will reportedly create thousands of new jobs.
A similar tax credit of up to a $7,500 already exists for plug-in electric vehicles. All-electric vehicles like Nissan Leaf and Ford Focus Electric among many others and some plug-in hybrids like Chevrolet Volt are eligible for $7,500, while a Prius Plug-in buyers are eligible for $2,500 federal tax credit.