Electric vehicles are typically considered expensive vehicles to own. But the latest federal tax program, designed to make them more affordable, can credit up to $7,500 toward the purchase of a new clean car.
Throughout January, the government has been fine-tuning the details of its new EV tax credit program, just as many Americans are heading into tax season. Some of the new changes enacted by passage of the Reinforced Inflation Act broaden the scope of eligibility, allowing more buyers and lenders to qualify for some tax credit.
For example, from 2023, people who purchase a used car will also receive a reduced credit amount.
As program requirements evolve, understanding whether your vehicle qualifies for credit under the program and how much you can receive can be complicated.
Get answers to your EV tax program questions, including why the EV tax program was introduced, what’s new for 2023, and how to claim the clean car tax credit.
What is its purpose?
When President Joe Biden passed the IRA bill in August 2022, he didn’t just target higher inflation. According to the White House, he has also signed various programs to encourage Americans to make sustainable living choices and reduce energy costs, including electric vehicle owners.
Keith Barry, automotive writer for Consumer Reports, said the new federal EV credit program also aims to make buying a cleaner car more affordable for the average consumer. increase.
“The way the tax credit is designed, it appears to be aimed at stimulating sales of North American-made vehicles and stimulating sales of affordable EVs,” Barry said.
The bill specifically required that all vehicles must undergo “final assembly” in North America. It also removed his 200,000 vehicle cap for manufacturers that were previously ineligible for the credit, and some Tesla, General Motors, and Toyota models were eligible for tax breaks.
However, some sourcing requirements remain unclear, such as rules for critical minerals and battery components. The Ministry of Finance, which oversees tax administration, said it would release additional information in March.
Workers assemble an R1T truck at the Rivian electric vehicle plant in Normal, Illinois, Monday, April 11, 2022. (Brian Cassella/Chicago Tribune/TNS)
New for 2023
For the first time, pre-owned electric vehicles are eligible for a credit of up to $4,000 or 30% of the final sale price, whichever is lower.
Additionally, used EVs do not have to be manufactured in North America, bypassing final assembly rules. However, according to the IRS, it should sell for $25,000 or less.
There are also spending requirements for new cars purchased in 2023. Most cars cannot exceed $55,000, and vans, pickup trucks, and sport EVs cannot exceed $80,000.
“The rules here exclude some of the most expensive vehicles from the tax credit and some of the wealthiest buyers from the tax credit,” Barry said.
New for 2023 is also the income requirement. For a new EV, the purchaser cannot exceed his $150,000 if single, his $225,000 if head of household, or his $300,000 if married.
For used EVs, the income threshold is even lower. The purchaser cannot earn more than $75,000 if he is single, $112,500 if he is head of household, and $150,000 if he is jointly applying.
If these requirements seem restrictive, there is another way to get around the production and income requirements — by leasing an EV. You can get The lender decides whether the deduction reaches the consumer.
Chris Harto, senior policy analyst at Consumer Reports, said in an email that leasing companies can offer the credit as a lump sum payment or as monthly reductions over the life of the loan.
“They have no legal obligation to transfer the credit, but hopefully competition in the market will encourage them to do so,” he said.
Which cars are covered?
The IRS has published a list of eligible new car manufacturers to purchase in 2023.
The index includes 13 manufacturers, including Honda, Volkswagen, Ford Motors, Kia, Rivian and Subaru. Some automakers have listed specific models and years, while others have yet to submit eligible makes.
How to apply:
According to the IRS, you can claim the deduction by completing Form 8936 on your tax return. This form requires you to report the vehicle identification number of the vehicle in question.
Barry noted that this process could become easier in 2024 as requirements become clearer. From 2024, buyers will be able to transfer credit to dealers “at the point of sale,” according to the Treasury Department, which will directly reduce the price of the car.
“(2023) is the year of transition,” he said. “Next year things will be more resolved and people will be able to get that credit at the point of sale, which will make things a lot easier.”
Details will be finalized in the months to come, so you might be tempted to buy an EV right away. If you already have a car you’re interested in, it might be wise to finalize your purchase before March.
Barry recommends consulting a tax professional or accountant rather than a car dealer if you have questions about how credit works.
___
5 electric SUVs for almost every budget
Chevrolet Volt EUV
Has been updated
The Bolt EUV is a crossover version of the Bolt EV hatchback. With significant price reductions for model year 2023 and bonus cash incentives for model year 2022, it will be the most affordable electric crossover SUV on the market. The Volt EUV’s low price doesn’t mean short range or cut-rates in the car. The Bolt EUV has solid EPA-estimated range, and could potentially go farther, much like its hatchback counterpart did in Edmonds’ real-world range test.
Inside, you’ll enjoy great technology like the Bolt EUV’s large touchscreen, digital instrument panel, Super Cruise hands-free driver assistance system, and features like heated and ventilated front seats. There is plenty of room for passengers as well. However, it lacks cargo space compared to its rivals.
Starting price: $34,495, or $28,195 after Chevrolet bonus cash incentive
EPA Estimated Mileage: 247 miles
Copyright 2023 by YAKTRINEWS. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Hyundai Ionic 5
Has been updated
The Ioniq 5 is Hyundai’s latest electric SUV. With a cool, retro-yet-futuristic design, Hyundai offers nearly identical cabins to his Tucson. The Ioniq 5’s larger battery pack offers solid range, but a little less than its competitor’s Mustang Mach-E Extended Range. However, the Ioniq 5 boasts the fastest potential charging speeds on this list with a suitable DC fast charger.
Overall comfort is excellent, and the Ioniq 5 is easy to drive. It’s also as fast as the Tesla Model Y Long Range. However, the luggage compartment is average and the front trunk is very small. There is plenty of technology inside. The Ioniq 5 even has the ability to power small appliances and electronics with its battery.
Starting price: $41,245
EPA Estimated Mileage: 220-303 miles
Copyright 2023 by YAKTRINEWS. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Kia Niro EV
Has been updated
The Niro EV is another budget electric SUV. It comes with many standard features, including advanced driver assistance systems such as a navigation-based adaptive cruise control system. It also provides plenty of real mileage. Edmunds tested 285 miles on a full charge.
In addition to its many features, the Niro EV has a lot to like. It has quick acceleration, a smooth ride, and plenty of space for passengers. Its styling is a bit conservative, which some people like.
Starting price: $41,285
EPA Estimated Mileage: 239 miles
Copyright 2023 by YAKTRINEWS. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Ford Mustang Mach E
Has been updated
The Mustang Mach-E is one of Edmunds’ top-rated electric SUVs. Roughly the same size as the Escape, it comes in a variety of variations, from basic standard range models to high performance GTs. Ranges vary, but most are quite impressive, especially considering all Mach-Es Edmunds tested exceeded EPA estimates.
The Mach-E isn’t as intuitive to drive as a true Mustang GT coupé, but it handles well and offers quick acceleration. However, if you are considering GT trim, know that you will only get peak power in 5 second increments. The Mach-E comes standard with a number of tech features, including his large 15.5-inch touchscreen and an array of advanced driver assistance features.
Starting price: $44,995
EPA Estimated Mileage: 224-314 miles
Copyright 2023 by YAKTRINEWS. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
BMW iX
Has been updated
Want to get something really luxurious? Its front-end styling might be polarizing, but the BMW iX is otherwise easy to please. His first xDrive50 model for 2022 is very powerful, with an even more powerful M60 coming in 2023. The iX has a high EPA mileage estimate, easily surpassing that figure with 377 miles in Edmonds testing.
The iX is about the same size as the X5, but more comfortable and easier to drive. Its luxurious interior is unrivaled on the market and offers BMW’s latest iDrive operating system. It’s not as fast as the Tesla Model X, but it offers a more refined driving experience. The iX is currently Edmonds’ top-ranked electric SUV.
Starting price: $84,195
EPA Estimated Mileage: 305-324 miles
Copyright 2023 by YAKTRINEWS. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
PennyWise Podcast: 4 Tips for Buying a Used Car Online
Has been updated