The federal EV tax credit will change if the Inflation Reduction Act is signed into law. It has already been passed by the Senate. The House is expected to pass it on Friday and then it will be sent to President Biden to be signed into law. The Inflation Reduction Act includes a new tax credit of up to $4,000 on used electric vehicles. If you’re curious about the EV tax credit 2022 and which EVs qualify and for how much – read on as we’ll go over all that in this article!
Buyers of new all-electric and plug-in hybrid cars purchased in or after 2010 could receive a tax credit of up to $7,500 as long as the car manufacturer had not reached its 200,000 electric vehicle cap prior to the new law being passed. Tesla and General Motors (GM) reached their caps years ago. Toyota recently reached its cap in June 2022 and started phasing out its tax credits. Newer EVs like the Ford Mustang Mach E and Rivian R1T were both eligible for the full tax incentive of $7,500.
The eventual amount received by electric vehicle customers was based on the size of an EV’s battery pack and its battery capacity.
If EV owners purchased the car through a lease, the tax rebate would go to the car manufacturer they were leasing from.
Now with the Inflation Reduction Act, several requirements have been added, while other restrictions have been taken away. As mentioned earlier, the new law adds a federal tax credit for used all-electric and plug-in hybrid vehicles. The federal EV tax credit for used cars applies to ones put into service after December 31, 2023.
It also eliminates the 200,000 electric vehicle cap on tax credits. The law takes away tax credits for EVs not assembled in North America. Buyers of more expensive EVs, like the Lucid Air and Tesla Model S, will no longer be eligible for the electric car tax credit.
Above all the part of the law that restricts the number of once eligible EVs is the bill only allows the full electric vehicle tax credit to be claimed on EVs that can meet specific criteria. The criteria are at least 40 percent of battery minerals must be sourced from North America or from countries that have a free trade agreement with the U.S. by 2024 and by 2029 the battery minerals should be made with minerals recycled in North America and with battery components sourced from North America. The bill also states that if any battery minerals or components “were extracted, processed, or recycled by a foreign entity of concern,” the electric vehicle is ineligible for tax credits. As you can imagine, a couple of countries that would be on this list include China and Russia.
John Bozzella, Alliance for Automotive Innovation CEO, said in a blog post the new provisions drastically reduce the number of EVs eligible for the tax credit and none will be eligible for the full credit when the additional sourcing requirements go into effect in 2029.
To claim the federal EV tax credit you should file an Internal Revenue Service IRS form 8936 and fill in the appropriate line on your income tax Form 1040. The tax credits will help reduce the amount of taxes you owe the Internal Revenue Service.
The answer depends on how many EVs you’re purchasing in a year. You can only claim the tax credit once for each qualifying vehicle. That means if you were to buy another battery electric vehicle or plug-in hybrid vehicle you could claim the federal EV tax credit twice if the second car is also an eligible vehicle. Do keep in mind that you must claim the tax credit in the year you purchased the electric vehicle.
No, you should not wait to buy an EV in 2023. If the electric vehicle you’re interested in is eligible for the federal EV tax credit now you cannot afford to wait. As mentioned above, if your vehicle of choice is eligible for the tax credit today it may not be eligible next year. You could receive a considerable tax break so why miss out on that by waiting?
There are also numerous other EV incentives available for electric vehicles that are offered by states and local entities. Yes, you can apply for other EV incentives and take advantage of the savings you are eligible for on top of the federal tax credit. State incentives for EVs can be quite steep and help bring down the purchase price of an EV by a substantial amount. All EV incentives have deadlines or expiration dates.
At the same time, with gas and diesel prices fluctuating all the time the sooner you buy an electric vehicle, the sooner you start saving money driving a vehicle. Electricity is much cheaper than gasoline or diesel per mile, especially if you install an EV charging station at home. If you’re wondering, “How much does it cost to charge an electric car in 2022?” please check out our article, “Cost to Install EV Charger at Home.”
Car manufacturers have a new inventory of electric vehicles every year now, and 2022 is now different. In fact, the variety of electric cars available is better than in years past. There are plenty of EVs on the market and there is at least one fit for every type of lifestyle. Electric vehicles used to be a novelty and drivers understandably wanted to wait before they bought one, but now there are plenty to choose from.
If you are interested in a home EV charging station for your electric vehicle purchase you can’t afford to wait on that either. There are hundreds of EV charging incentives and rebates available from different entities and they all have expiration dates. A home EV charger is the ultimate best solution to saving time and money when it comes to charging an electric vehicle.
WattLogic is a leading EV charging company that is making the EV charging station installation process a breeze for EV owners and its residential customers. Just fill out our quick online survey, answer a few questions, and you’ll have an EV charging station installation quote in no time. There is zero obligation and you can do it all in the comfort of your own home. So no more complicated visits from an electrician and then waiting for a quote…just fill out the survey and sit back and relax! if you’re interested in learning more about home EV charging you can also contact us online.
Take the first step with a free 100% virtual home assessment to install an EV Charger!