EV Tax Credits Are Changing: What’s Ahead

[Jbrubakerjr]

So I have been looking for a table that would compare the EV credits before/after the signature of the Inflation Reduction Act on Tuesday. Not easy table because it is complex with all the changes. This seems to be the simplest article New electric vehicle tax credits, explained.

Here are the highlights, though (IMHO)

• The new credits will be $7,500 for new vehicles and $4,000 for used vehicles, and will apply to the purchase of EVs, plug-in hybrids, and cars with hydrogen fuel cells, and will be available from 2023 to 2032.
• Income restrictions: Married couples must have an adjusted gross income (AGI) of less than $300,000 and single people must have an AGI of less than $150,000.
• Vehicle price restrictions: You can earn a tax credit for the purchase of an electric van, SUV, or pickup truck that costs less than $80,000, while other EVs have a limit of $55,000.
• Manufacturing restrictions: If your EV (or the individual parts, like batteries) was manufactured or sourced outside of North America, you likely won’t be eligible for the tax credit.
• Used EV restrictions: To qualify for the credit, you would need to purchase a car that is at least two model years old, and the credit would be either $4,000 or 30% of the price of the car, whichever is lower, with a price cap of $25,000.

The confusing part - The Inflation Reduction Act eliminated the old EV tax credits immediately, but the new credits don’t go into effect until January 1, 2023. The bill includes a “transition rule” that allows buyers who signed a binding purchase agreement for an EV before August 16, 2022, to qualify under the old EV tax credit agreement.

So there is a gray area for vehicles purchased for the remainder of this calendar year, and there is a reset for companies like GM, Tesla, Ford? that have will reach the 200,000 vehicle eligibility limit beginning Jan 1, 2023.

With the assembly and sourcing rules, though, AND with the pricing limits, it seems like maybe more than 70% of the current EVs that are eligible will be eliminated, including most of the Luxury EVs, and the F150 Lightning Lariats and Platinums, depending on how they are equipped.

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[AzScorpion]

From what I've read (and tried to understand) and videos I've watched this new bill won't help many. There's going to be a lot of surprised people out there when they go to apply for their tax credits and are rejected.

 

[Trigganometry]

Another money grab scam. Most EV’s will cost more than what’s allowable and we all know battery production in mass production for the new players is years off. So you’re going to be seeing that “denied” rebate stamp used extensively. Can you say “cash for clunkers 3!”

 

[SigOris]

From what I've read (and tired to understand) and videos I've watched this new bill won't help many. There's going to be a lot of surprised people out there when they go to apply for their tax credits and are rejected.

I just read an article about how the US PRAVDA like media outlets talked up this smoke and mirrors legislation are now questioning if it does anything to reduce inflation.

I agree BOHICA times are on the horizon

 

[Jbrubakerjr]

From what I've read (and tired to understand) and videos I've watched this new bill won't help many. There's going to be a lot of surprised people out there when they go to apply for their tax credits and are rejected.

Agreed. Kind of like a wolf in sheep's clothing. On the surface it looks like something is being done, but when you read it more in depth it seems the more people that either won't be eligible or won't be impacted, and vehicle restrictions that it limit it to certain vehicles and sourcing. I mean, I am America first 100%, but it more makes you question the agenda here. Is it for green, really? Because this seems to focus on $$ and manufacturing more than it does a green initiative. (Hoping not crossing the line with this one).

So less vehicles that will be eligible (based on price and assembly location), and less rebate potentially available to offset cost (based on materials sourcing). I mean, if I read it correctly, Ford's deal to source battery components fro China for 600,000 batteries/year could significantly decrease the rebate amount that vehicle would be eligible for.

The silver lining, if any, is that used EV's would be eligible, but again, it also says somewhere in it that a vehicle is only eligible once in it's lifetime.

 

[Trigganometry]

Agreed. Kind of like a wolf in sheep's clothing. On the surface it looks like something is being done, but when you read it more in depth it seems the more people that either won't be eligible or won't be impacted, and vehicle restrictions that it limit it to certain vehicles and sourcing. I mean, I am America first 100%, but it more makes you question the agenda here. Is it for green, really? Because this seems to focus on $$ and manufacturing more than it does a green initiative. (Hoping not crossing the line with this one).

So less vehicles that will be eligible (based on price and assembly location), and less rebate potentially available to offset cost (based on materials sourcing). I mean, if I read it correctly, Ford's deal to source battery components fro China for 600,000 batteries/year could significantly decrease the rebate amount that vehicle would be eligible for.

The silver lining, if any, is that used EV's would be eligible, but again, it also says somewhere in it that a vehicle is only eligible once in it's lifetime.

Watch how many people sell their EV to a family member in the same house for book value to turn around and claim the rebate! Can see that scam a mile away already

 

[kieefer]

I’m sure you have read that both Ford and GM raised their prices on EV’s accordingly so it’s essentially a subsidy for big corporations.
As usual, once the gov meddles in the free market, or anything, they make matters worse.

 

[AzScorpion]

Agreed. Kind of like a wolf in sheep's clothing. On the surface it looks like something is being done, but when you read it more in depth it seems the more people that either won't be eligible or won't be impacted, and vehicle restrictions that it limit it to certain vehicles and sourcing. I mean, I am America first 100%, but it more makes you question the agenda here. Is it for green, really? Because this seems to focus on $$ and manufacturing more than it does a green initiative. (Hoping not crossing the line with this one).

So less vehicles that will be eligible (based on price and assembly location), and less rebate potentially available to offset cost (based on materials sourcing). I mean, if I read it correctly, Ford's deal to source battery components fro China for 600,000 batteries/year could significantly decrease the rebate amount that vehicle would be eligible for.

The silver lining, if any, is that used EV's would be eligible, but again, it also says somewhere in it that a vehicle is only eligible once in it's lifetime.

This is a tough one to discuss without getting political but I'm sure we all can TRY.

It always was about the money and never about helping us out. Sure there might be some this will benefit but from what OI've seen it'll be very few. Hopefully once the new Blue Oval City Ford is building now in TN will help with the rebates.

I guess it's only fair that the used vehicle rebates are only eligible once . It's like with the solar I bought for my house, I'm the only one eligible for the rebates because I put out the initial investment.

 

[mtsoxfan]

Can these rebates be applied if useing the standard deductions? We "save" more money by using standard deductions vs itemizing...

 

[Jbrubakerjr]

Can these rebates be applied if useing the standard deductions? We "save" more money by using standard deductions vs itemizing...

I think so, BUT... you have to have a tax due that at least equals the rebate amount, or "No Rebate for You!"

 

[SigOris]

Can these rebates be applied if useing the standard deductions? We "save" more money by using standard deductions vs itemizing...

That’s an interesting question as we itemize and end up using the STD Deduction

 

[AzScorpion]

I think so, BUT... you have to have a tax due that at least equals the rebate amount, or "No Rebate for You!"

If it works the same way (it should) as my house solar credits this is correct. Being self employed it was easy for me as I just skipped a couple quarterly payments to receive the credit.

Otherwise.....

 

[Jbrubakerjr]

That’s an interesting question as we itemize and end up using the STD Deduction

It is a separate line item from that deduction. It is a credit off of your total taxes due. So if your taxes due are $8,000, you will only owe $500, and will get a rebate check for anything you paid over that $500 for the year.
But if your taxes due are only $4,000, you don't get a credit for more than that $4,000, so you will get a rebate check for whatever has already been paid withheld.

 

[Jason B]

The Green New Deal and any 'climate crises' rhetoric is really about transfer of wealth.
But we should have known that when gub'ment says they will give new tax credits they would be attached to a mile long list of exceptions/qualifications. How many EV's in the US are 100% made in NA including all its parts?
To wit:

• Manufacturing restrictions: If your EV (or the individual parts, like batteries) was manufactured or sourced outside of North America, you likely won’t be eligible for the tax credit.

 

[SigOris]

It is a separate line item from that deduction. It is a credit off of your total taxes due. So if your taxes due are $8,000, you will only owe $500, and will get a rebate check for anything you paid over that $500 for the year.
But if your taxes due are only $4,000, you don't get a credit for more than that $4,000, so you will get a rebate check for whatever has already been paid withheld.

Thanks, I forgot these aren’t exerted on Schedule A

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