Ranked in Top 500 Fastest Growing Companies in The USA
Electric vehicles are all the rage now but there’s good and bad news if you’re in the market for an electric or plug-in hybrid electric vehicle. But you need to know what the program is all about.
The good news is that the newly enacted Inflation Reduction Act includes a wholly revamped tax credit for electric vehicles that starts in 2023 and continues through 2032. The bad news is that the credit, now called the “clean vehicle credit,” comes with many new restrictions.
The clean vehicle credit remains at a maximum of $7,500. But due to changes, beginning in 2023, in order to qualify for the credit, you will need:
However, there is more to know. The 2023-and-later credit includes new domestic assembly and battery sourcing requirements.
The new law reduces or eliminates the credit when the vehicle fails the battery sourcing requirements. Currently, no electric vehicle will qualify for the full $7,500 credit. Manufacturers are working feverishly to change this, but it could take a few years.
The new credit is not all bad—it eliminates the cap of 200,000 electric vehicles per manufacturer. Thus, popular electric vehicles manufactured by GM, Toyota, and Tesla can qualify for the new credit if they meet the price cap and other requirements.
Also, starting in 2024, you can qualify for a credit of up to $4,000 when purchasing a used electric vehicle from a dealer (not an individual). But income caps also will apply to this credit. As well, you’ll be able to transfer your credit to the dealer in return for a cash rebate or price reduction. This way, you can benefit from the credit immediately rather than waiting until you file your tax return.
While this advice is based upon the 2022 rules, there will be options and benefits to purchasing an electric vehicle in 2023. Call us today at 630-278-5023 to schedule a complimentary tax planning consultation to see how we can help legally reduce YOUR taxable income today!