The Inflation Reduction Law extended the tax break through 2031 but modified some requirements to get the full $7,500 value of the clean vehicle tax credit, and it would be tougher starting in March.
$7,500 Tax Break For Purchasing EV Won’t Be Easy By March (PHOTO: Yahoo Finance)
Electric Vehicle Tax Credit
On January 1, the tax credits for purchasing electric vehicles (EVs) got a major overhaul. The Inflation Reduction Law extended the tax break through 2031, a $7,500 tax break for the purchase of a new electric vehicle will likely get harder in a few months.
The Inflation Reduction Act, a historic climate measure that President Biden signed in August, tweaked rules for a current tax credit associated with the purchase of clean vehicles. Some tax and auto experts believe that a largely intended to bring more manufacturing and supply chains within US borders and those of allies will temporarily make it more challenging to authorize all or some part of the credit.
Rules That On Hold Until The IRS Issues Guidance
Some of the tax credit rules took effect on January 1 but others about battery minerals and components are arguably the more challenging to meet. However, all of these don’t take effect until the IRS issues guidance. The agency anticipates implementing it in March 2023. By that time, many clean vehicles that currently qualify for the tax break may not be eligible anymore at least, until manufacturers can satisfy the new rules.
According to experts consumers who are in the market for a new electric vehicle, truck or SUV likely have a limited time within which they can more easily claim the tax break. As of January 17, IRS said that manufacturers have identified 27 all-electric vehicles and 12 plug-in hybrid vehicles and truck models that qualify for the tax break based on existing rules.
Tesla cut prices on some car models this month, helping them to eligible for a tax break. There will likely be additions to the vehicle list in the coming days and weeks, the IRS announced.
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