Inflation Reduction Act (IRA) is landmark federal legislation that has established several tax credits and rebates to help homeowners, businesses and non-profit organizations improve energy efficiency and increase renewable energy.
The IRA provides for an Electric Vehicle federal tax credit of up to $7,500 for new EVs and $4,000 for used EVs! The rules are complex and uncertain, and qualifying models will change yearly. There are income restrictions which started in 2023.
- The Electric Vehicle federal tax credit is up to $7,500 for new EVs and $4,000 for used EVs!
- The rules are complex and uncertain, and qualifying models will change yearly.
- There are income restrictions which started in 2023.
For vehicles purchased beginning January 1, 2023
The bulk of the Inflation Reduction Act EV credit rules go into effect, including:
- Elimination of the manufacturer production cap, potentially making Tesla, Toyota and GM vehicles eligible, but the continuation of North American assembly requirements that came into effect when the bill was signed.
- $7,500 credit for new electric vehicles (EV) or plug-in hybrid electric vehicles (PHEV) with MSRPs less than $55,000 for cars and $80,000 for SUVs and light-duty trucks
- Used EV and PHEV credit of 30% of purchase price up to $4,000. Vehicle must be purchased from a dealer and be the vehicle's first non-new ownership transfer. Final assembly rules and material sourcing rules pertaining to new EVs do not apply. EV must be purchased from a dealer, private sales are excluded
- The $7,500 new vehicle credit is actually two credits each worth $3,750, one dependent on battery assembly in North America, and the other dependent on critical minerals sourced from North America or a trade-friendly country. These requirements may reduce or eliminate the credit for most vehicles until manufacturing and supply chains adjust over time.
- Income cap of $150,000 for individual filers and $300,000 for joint filers for new EV credit, and $75,000 for individual filers and $150,000 for joint filers for used EV credit
For vehicles purchased beginning January 1, 2024:
Option of transferring credit for both new and used EVs to dealership for point-of-sale price reduction, allowing those with low tax liability the ability to take advantage of the credit