As the year starts, the EV tax credit changes its qualifications as the IRS offers further guidance.
Electric Vehicle Tax Credit to Send Out $7,500 to Eligible Residents
After its signing last August, the Inflation Reduction Act changed the availability of electric vehicle tax credits. Since the law is still being implemented, it is subject to changes along the way with the help of the IRS. The law allows taxpayers with plug-in hybrid models to access full credit. This brings more electric vehicles and battery production to the US and ensures that credits are not only for luxury cars purchased by members of the upper-income brackets.
With this, the adjustment period of different provisions makes it confusing for the EV community on what vehicles will qualify and when. To qualify for electric vehicle purchase tax credits, the vehicle must be assembled in North America. The list of cars with final assembly in North America can be found in the Department of Energy’s Alternative Fuels Data Center.
Qualifications for Electric Vehicles Tax Credit
Even though the law states that the vehicle must be assembled in North America, cars assembled outside may qualify for the EV tax credit through the commercial vehicle tax credit. This means dealerships can still file for tax credits on leased vehicles and pass this on in the form of lower lease payments.
According to a published post by Electrek, EV tax credits are limited to cars under $55,000 MSRP and under $80,000 MSRP for trucks and SUVs. The law includes how an SUV can be identified and the applicable MSRP limit for each model. MSRP is not the price you paid but the manufacturer’s suggested price listed on the window sticker.