The Inflation Reduction Act overhauled tax credit incentives to purchase a new electric vehicle through 2032. However, several restrictions added a layer of confusion for potential EV buyers. And, to make matters worse, some electric vehicles that made the cut for the credit no longer do in 2023. So, here’s everything you need to know about the 2023 EV tax credit changes.
There are even more requirements, and they could change again come March 2023.
New income caps for the tax credit took effect on January 1. Married couples who jointly file taxes must make under $300,000. Additionally, the “heads of households” must make less than $225,000. And all other filers in the household must make less than $150,000 per year to qualify.
Additionally, for the vehicle to qualify for the EV tax credit in 2023, it must meet a few other requirements. For example, the battery must have a capacity of at least seven kilowatt-hours (kw/h). And the EV has to have a gross weight of fewer than 14,000 pounds.
Fortunately, for the first time, purchasers of used electric vehicles can also qualify for the credit. Used EVs made in 2021 or earlier can qualify for up to a $4,000 tax stipend. And Reuters reports new guidelines for EV part sourcing will change vehicle eligibility come March.
The $7,500 2023 EV tax credit is a mess of hoops to jump through.
Firstly, and most importantly, there are price thresholds that your electric vehicle must fall under to receive the credit. Though the price threshold hasn’t changed, the price of electric vehicles certainly has. Electric cars must cost less than $55,000, and SUVs less than $80,000.
Unfortunately, according to Kelley Blue Book, the average price for an EV last year skyrocketed to over $66,000. Many electric cars don’t qualify for the credit anyway. And NPR reports some of the eligible vehicles listed by the IRS won’t make the cut in 2023. More affordable options such as the Nissan Leaf and Chevy bolt are safe bets. However, if you’re looking for a more luxurious experience, you most likely won’t get the $7,500 credit.