If you buy an electric car in March, you will have a chance to get a tax credit of up to $7,500
- Biden’s Inflation Reduction Act includes a tax credit of up to $7,500 for tram Purchase.
- The recent rule delay could give buyers a greater chance of getting full credit through March 2023.
- Here’s what Americans looking to buy an electric car need to know about credit.
If you’re looking to buy an electric vehicle — and take advantage of the new tax credits — you might want to make it a New Year’s resolution, thanks to the recent delay in one of the eligibility rules. .
President Joe Biden’s Inflation Reduction Act (IRA), passed in August, includes substantial investments to combat the climate crisis and reduce carbon emissions emissions. A notable part of that is encouraging Americans to buy electric cars and help the environment.
Specifically, Biden signed into law a federal tax cut of up to $7,500 for households buying new electric vehicles (EVs), along with a $4,000 credit for used electric vehicles. One caveat that may disqualify many cars for full credit is that they must contain the battery minerals and other car parts originated in North America. They must also be assembled in North America.
Because of this rule, many automakers don’t expect their battery and materials sourcing to comply, and as such, those cars will only be eligible for half the credit — $3,750 — if they meet the requirements. meet certain production requirements.
However, the Ministry of Finance recently slow implementation of the sourcing section of that rule through March. So for now, people who bought electric vehicles before March will be more likely to qualify for the full $7,500.
Here’s what you need to know about EV credits.
Who is eligible for a tax credit for a new electric vehicle?
If you’re looking to buy a new EV and claim a $7,500 credit, you must first meet the following income requirements:
- An applicant earns $150,000 or less
- Head of household tax filers with income of $225,000 or less
- Or joint filers earning $300,000 or less
Additionally, the credit can only be used for car-based EVs that cost $55,000 or less, with a maximum of $80,000 for vanstrucks and SUVs. These are the cars that the Treasury says are currently eligible.
How can I qualify for a larger limited-time EV credit?
On January 1, new guidance on buyer income and electric vehicle pricing will go into effect. But because the Treasury Department delayed the implementation of the mineral sourcing rule for batteries until March, buyers could have a chance to get an extra $3,750 if they buy an electric vehicle that may not meet at all. mineral claim and battery component claim to receive the full $7,500 tax credit.
That’s because once the new guidelines are in place, there will be stricter requirements for eligible cars, so buyers will have a better chance of getting the credit before March. For example, like transportation site Electrek put itthe Chevy Bolt will be a “good deal” between January and March as it could qualify for an additional $3,750 in credits that it won’t be eligible for when the new rules go into effect. .
If you bought an EV in 2022, you can claim the purchase on your 2023 tax return, but the credits will run out once the manufacturer hits its 200,000 qualifying vehicle sales limit, based on Department of Energy. For purchases made after August 17, 2022 — when the IRA is approved — the requirements only apply to vehicles manufactured in North America, and in 2023, the sales cap will be removed.
Can I qualify for a tax credit on a used electric vehicle purchase?
Starting in 2023, a used electric vehicle will be eligible for a credit of up to $4,000 capped at 30% of the vehicle’s purchase price. Besides:
- Credit is only applicable for the first vehicle transfer
- The car must cost $25,000 or less
- The car model must be at least 2 years old
- And credit can only be claimed once every three years.