![]() “Starting in 2024, if any minerals or components are sourced from ‘foreign entities of concern,’ including China or Russia, the vehicle will not qualify for any tax credit,” Consumer Reports notes. And if the battery isn’t manufactured in North America - 50 percent of its value at first, rising to 100 percent in 2029 - the rest of the tax credit disappears.Īnd there’s more. If the automaker doesn’t meet the sourcing requirement, the credit drops to $3,750. through a free trade agreement, and that quantity rises to 80 percent by 2027 and 100 percent by 2029. “And those rules become more stringent over time.” By 2024, 40 percent of the materials in the batteries have to be sourced from North America or a country linked to the U.S. ![]() “Under the law, an electric vehicle must contain a battery built in North America with minerals mined or recycled on the continent,” The Associated Press explains. Things get more complicated when it comes to batteries. They can’t cost more than $25,000 and have to be at least two years old. Used electric vehicles - eligible for a $4,000 credit or 30 percent of the sale price, whichever is lower - can only be purchased at a dealership. That will tell you which plant the vehicle was assembled at and the sources for its constituent parts.įor the rest of 2022, consumers are still limited by a previous rule that phases out tax credits for automakers that have sold more than 200,000 EVs in the U.S., meaning GM, Toyota, and Tesla are still ineligible. You can check to see if a particular EV is eligible by typing its 17-character Vehicle Identification Number (VIN) into the National Highway Traffic Safety Administration’s VIN Decoder tool. But many popular EV models are either too expensive to qualify for the tax credit or were assembled in Europe, Japan, or South Korea. The Energy Department has a list of 31 20 models that should qualify for the tax credit, and Consumer Reports has its own rundown. Starting in 2023, the tax credits will apply only to electric and hydrogen fuel cell cars and trucks, and some plug-in hybrids, assembled in North America that cost less than $80,000 for trucks and SUVs or $55,000 for cars. Which cars and trucks are eligible for the rebates? People who file as heads of household can earn up to $225,000 for a new EV or $112,500 for a used EV. For used hybrids and electric vehicles, that income cap drops to $75,000 for individual filers or $150,000 for households. The tax credits for new EVs are available to individuals whose gross adjusted income is less than $150,000 a year or households that earn up to $300,000. And starting in 2023, the law sets income caps, price limits, and manufacturing rules designed to get electric cars and trucks that are substantially made in North America into the hands and garages of middle-class Americans.Īmericans who buy eligible EVs in 20 will have to claim the credit when they file their tax returns, but starting in 2024, the Treasury Department says in its FAQ on the tax credits, “the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.” Who can claim the tax credit? 16, the credits only apply to vehicles assembled in North America. But there are quite a few qualifications.įirst, as of Aug. The $7,500 tax rebates for eligible new electric vehicles are already available, and the new $4,000 credit for certain used EVs takes effect in 2023. How much are the tax credits and when do they become available? Here’s a brief guide to buying an EV with IRA rebates. But the new law also includes tax credits for purchasing new and used electric vehicles, with several stipulations. The Inflation Reduction Act, the sweeping climate and health care law President Biden recently signed, makes the largest ever federal investment in fighting climate change, orders Medicare to negotiate lower drug prices, and ensures that large companies pay at least 15 percent income tax, among other changes.
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