What does the Inflation Reduction Act Impact on Electric Vehicles(EV’s)?

The Inflation Reduction Act (IRV) of 2022, which was signed into law on August 16, 2022 is perhaps the most significant legislation to accelerate an electrified future in the automotive industry. It’s a federal investment in clean energy technologies that will offers incentives for consumers to purchase Electric Vehicles.

What is the Internal Revenue Service Code Section 30D (IRC 30D)?

Internal Revenue Service Code Section 30D (IRC 30D) is a tax credit for qualified plug-in Electric Vehicles including passenger vehicles and light trucks. A Tax credits provide a dollar-for-dollar reduction to your income tax bill. That means that a $7,500 tax credit would save you $7,500 in taxes.

What is the Internal Revenue Service Code Section 25E?

Section 25E applies to Previously Owned EV Vehicles which provides that in case of a qualified buyer who during a taxable year, places in service a previously-owned clean vehicle, an income tax credit is allowed for the taxable year equal to the lesser of $4,000, or the amount equal to 30 percent of the sale price with respect to such vehicle.

When does this start?

The new Tax Credit applies for EV’s purchased beginning January 1, 2023

If I purchase a new EV in December 2022 and physically take delivery in 2023, will this qualify?

No.

Will GM vehicles qualify?

Yes, the tax credit cap for automakers after they hit 200,000 EVs sold is eliminated, making GM, Tesla and Toyota once again eligible.

How do I know if the EV was assembled in North America?

The US Department of Energy offers a VIN decoder tool to identify where a given EV was assemble. Click Here.

How do I know if the EV was assembled if a certain percentage of “critical minerals” came from North America or countries with free trade agreements with the U.S.?

Manufactures will announce this and the government will most likely offer some guidance.

Can a dealership apply for the Federal Tax Credit for me?

Yes. Starting January 1, 2024, a taxpayer may elect to transfer the credit to a dealer, which will enable buyers to receive the credit as a rebate at the point of sale.

Are there any other state incentives?

Yes, however in additional to any federal credit you may or may not qualify for, there are a number of regulations, and funding opportunities available at the state level.