Purchasing an electric vehicle might qualify you for a new EV tax credit as part of the Inflation Reduction Act. Unfortunately, some detractors say the new credit could hurt the electric vehicle industry in the US. Not to mention, many current electric vehicles on the market don’t qualify for the credit. Here’s everything you need to know about the new EV tax credit.
The new EV tax credit extension
The new EV tax credit extends a previously existing $7,500 credit for new electric vehicle purchasers until 2032. The credit includes plug-in hybrids and now qualifies used EVs and plug-ins for a $4,000 credit. Unfortunately, not everyone who buys an EV or plug-in is eligible.
Price and manufacturing restrictions on the credit
There is a $55,000 cap on sedans and an $80,000 cap on SUVs, trucks, and vans. Which is a bit tough, considering the average price for an electric vehicle in 2022 is $54,000. Several options are available under that price point. But, you’re out of luck if you’ve been eyeing a new Tesla or other luxury electric vehicles. According to the Alliance for Automotive Innovation, 70% of clean-energy cars on the US market are immediately ineligible for the kickback.
The credit aims to boost EV production in the United States and will eventually impose further manufacturing restrictions. Only vehicles using components sourced and manufactured in North America qualify for the full credit. Once the government enforces these additional restrictions, no EVs currently available in the market qualify for the credit.
Income restrictions
The new EV tax credit also comes with income restrictions. Single filers who gross over $150,000 are ineligible for the credit. Married couples with joint income over $300,000 and heads of households with over $225,000 are all disqualified.
Were you planning on buying a new or used electric vehicle? In the comment section below, let us know your thoughts on the new EV tax credits.
