New Federal Tax Credits in the Inflation Reduction Act

Federal tax credit for EVs will remain at $7,500 Timeline to qualify is extended a decade from January 2023 to December 2032 Tax credit cap for automakers after they hit 200,000 EVs sold is eliminated, making GM, Tesla, and Toyota once again eligible The language in the bill indicates that the tax credit could be implemented at the point of sale instead of on taxes at the end of the fiscal year That means you can get your credit up front at the dealer, but these terms may not kick in until 2024 In order to get the full tax credit, the EV must be assembles in North America and… Two binary pieces separate the full $7,500 credit meaning the vehicle either qualifies for each piece of the credit or it doesn’t $3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US. The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US Note – these battery requirements are now being enforced as April 18, 2023. More below. The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027 The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029 Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit Qualifying EVs must also have a battery size of at least 7 kWh and a gross vehicle weight rating less than 14,000 pounds New federal tax credit of $4,000 for used EVs priced below $25k Subject to other requirements like lower annual income (see below) Revised credit applies to battery electric vehicles with an MSRP below $55,000 Also includes zero-emission vans, SUVs, and trucks with MSRPs up to $80,000 New credit also expands to commercial fleet customers Includes separate qualifications and limits The federal EV tax credit will be available to individuals reporting adjusted gross incomes of $150,000 or less, $225,000 for heads of households, or $300,000 for joint filers The new credit will also continue to apply to Plug-in Hybrid EVs (PHEVs) as long as they meet the same requirements outlined above Revamped used vehicle credit

Used EVs also got revised terms that now offers a credit equal to 30% percent of the sale price (up to $4,000). That should help consumers like yourselves get some change back in your pocket at the end of the fiscal year. As long as you stick to these terms as outlined by the IRS. To qualify as a customer, you must: Be an individual who bought the vehicle for use and not for resale Not be the original owner Not be claimed as a dependent on another person’s tax return Not have claimed another used clean vehicle credit in the three years before the EV purchase date Modified adjusted gross income must not exceed $75k for individuals, $112,500 for heads of households, and $150k for joint returns For the used EV to qualify for federal tax credits, it must: Have a sale price of $25,000 or less Have a model year at least two years earlier than the calendar year when you buy it For example, a vehicle purchased in 2023 would need a model year of 2021 or older Not have already been transferred after August 16, 2022, to a qualified buyer Have a gross vehicle weight rating of less than 14,000 pounds Be an eligible FCV or plug-in EV with a battery capacity of least 7 kilowatt hours (kWh) Be for use primarily in the United States You buy the vehicle from a dealer For qualified used EVs, the dealer reports required information to you at the time of sale and to the IRS Purchaser must be an individual (no businesses) to qualify for used credit A used vehicle qualifies for tax credit only once in its lifetime FOR COMPLETE ARTICLE SEE: https://electrek.co/2023/04/17/which-electric-vehicles-still-qualify-for-us-federal-tax-credit/