EV Incentives Extended
Under the Inflation Reduction Act, the Federal tax credit for EVs will continue to be $7,500. Exciting at first sight, but the devil is in the details as not all, and very few vehicles qualify for the full $7,500 credit. Even if your car qualifies for the full credit, there are more caveats to consider; let’s dive in!
Credit Requirements
About 70% of current EVs may not qualify for the entire federal tax credit, a maximum credit of $7,500 for new EVs and $4,000 for used EVs. What matters is your income tax and the size of the electric battery in the vehicle you are considering.
Vehicle Type
Trucks, vans, and SUVs must cost under $80k, while cars under $55k will qualify for the incentives.
Income
The purchaser of the EV must have an Adjusted Gross Income of $300k or less for joint filers and $150,000 for individuals.
Battery
The battery and rare metals of the EV must be sourced from the US. After 2023 batteries with components made in China disqualify from receiving the tax credit.
Used EVs
New $4,000 used EV federal tax credit for EVs under $25,000. Subject to requirements such as lower annual income.
Bolstering US battery production
From these requirements, the most restrictive is finding EVs where the battery materials are sourced within the US. This is why so many EVs are disqualified from the total credit, making it harder for residents to register the entire credit in the near term.
With this requirement in mind, it will push for higher adoption rates of US-made batteries and EVs, which will help the national manufacturing efforts for electric motors and parts. There is already pushback from Korean automakers such as Hyundai and Kia that don’t want the US to discriminate against non-US automakers. As the benefits realize themselves for US residents, the impacts on the global EV market will be fleshed out over the next few years.
Preparing for electrified transportation
Acquiring a car, electric or gas-powered, is a significant investment. Are you thinking about electrifying how you move around town? Here is our blog on The Cost of Driving On Electricity vs. Gas
Consider that EVs need a little prep work if you want to maximize the convenience of being transported by electrons! Such as upgrading your panel to account for the electrical load of charging your car from home. Calculate your average driving distance to assess what charging rate best suits your needs. We are here to help find the best solution for you to take power into your own hands and invest in a more sustainable future.
