How electric vehicles will qualify for the new federal tax credits from the Inflation Reduction Act are now being posted by the Internal Revenue Service and the EPA websites. After August 16—only vehicles with final assembly in the US qualify. More restrictions will go into affect over time including how the batteries are sourced. Here are the first specs provided by the feds that are not necessarily final.
What Vehicles Do Not Qualify?
So far the Porsche Taycan, Kia Niro and Audi e-Tron will not qualify for the new rebates. We also suspect that the Fisker Ocean (Made in Europe), many models from Hyundai, Toyota, Honda, Mazda, MINI and Volkswagen (before they are being assembled in the US) will not qualify.
Used electric vehicle costing less than $25,000 may qualify for a $4,000 credit up or 30% of the price or rebate starting in 2023–for only those who individuals who make under $75,000 or couples who make under $150,000.
Credits at point of sale will not go into effect until 2024.
Consumers that purchase a qualifying electric vehicle can continue to claim the electric vehicle tax credit on their annual tax filing. Starting in 2024, the Inflation Reduction Act will allow car buyers to transfer the credit to dealers at the point of sale so that reduces the purchase price.”
Important Information About Tax Credits:
The Inflation Reduction Act of 2022— changes credit amounts and requirements for clean energy vehicles.
Enacted August 16, 2022 The Inflation Reduction Act of 2022 (Public Law 117-169) amends the Qualified Plug-in Electric Drive Motor Vehicle Credit (IRC 30D), now known as the Clean Vehicle Credit, and adds a new requirement for final assembly in North America that takes effect on August 16, 2022. Additional provisions will go into effect on January 1, 2023.
Preliminary guidance from the Internal Revenue Service addresses two important issues regarding vehicles purchased in 2022:
What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.
Future Guidance
To reduce carbon emissions and invest in the energy security of the United States, the Inflation Reduction Act of 2022 significantly changes the eligibility rules for tax credits available for clean vehicles beginning in 2023. The Internal Revenue Service and the Department of the Treasury will post information and request comments from the public on various existing and new tax credit incentives in the coming weeks and months. Please look for updates on IRS.gov and other announcements from the Administration.
The Department of Energy has provided a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the final assembly requirement. Because some models are built in multiple locations, there may be vehicles on the list that do not meet the final assembly requirement in all circumstances.
To identify the manufacture location for a specific vehicle, please search the vehicle identification number (VIN) of the vehicle on the VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA). The website, including instructions, can be found at VIN Decoder.
NOTE: Some manufacturers that have vehicles assembled in North America have reached a cap of 200,000 EV credits used and are therefore not currently eligible for the Clean Vehicle Credit.
From AUTO Connected Car News: Please note the vehicles must cost less for $55,000 and $80,000 for trucks and SUVs only will qualify starting in 2023.
The base model Tesla Model 3 the only model under $55,000 if the Model Y is classified as SUV it may qualify.
Eligible individuals can make $150,000 annually or less, while married couples filing jointly can make up to $300,000 a year.
By 2024, half of the battery’s component value has to come from North America for tax credit eligibility which increased to 100% after 2028.
As vehicle manufacturers continue to submit the applicable vehicle identification information to the relevant government agencies, this list will be updated as more information becomes available.
The Lucid Air although it is made in Arizona–costs more than the $55,000 price cap-and will not likely be eligible for the credit.
Manufacturers that have reached the 200,000 electric vehicle credits cap will not qualify until Jan. 1, 2023.Electric Vehicles Assembled in North AmericaModel YearVehicleNote2022Audi Q5Check prices higher end models may go over the price caps.2022BMW 330e“”2022BMW X5“”2022Chevrolet Bolt EUVManufacturer sales cap met2022Chevrolet Bolt EVManufacturer sales cap met2022Chrysler Pacifica PHEVCheck prices higher end models may go over the price caps.2022Ford Escape PHEV“”2022Ford F Series“”2022Ford Mustang MACH E“”2022Ford Transit Van“”2022GMC Hummer PickupManufacturer sales cap met2022GMC Hummer SUVManufacturer sales cap met2022Jeep Grand Cherokee PHEV2022Jeep Wrangler PHEV2022Lincoln Aviator PHEV2022Lincoln Corsair Plug-in2022Lucid AirPrice is over $55,0002022Nissan Leaf2022Rivian EDVCheck prices higher end models may go over the price caps.2022Rivian R1S“”2022Rivian R1T“”2022Tesla Model 3Manufacturer sales cap met2022Tesla Model SManufacturer sales cap met2022Tesla Model XManufacturer sales cap met2022Tesla Model YManufacturer sales cap met2022Volvo S602023BMW 330e2023Bolt EVManufacturer sales cap met2023Cadillac LyriqManufacturer sales cap met2023Mercedes EQS SUV2023Nissan Leaf
AUTO Connected Car News–comment– always check prices higher end models may go over the price caps. Also is dealers add-on fees for additional features the prices may not meet price requirements.
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