IRA To Expand EV Tax Credits To Used EVs

By Staff Writer August 19, 2022 392
Buyers purchasing a used electric vehicle or plug-in hybrid can for the first time receive as much as $4,000 tax rebate. Buyers purchasing a used electric vehicle or plug-in hybrid can for the first time receive as much as $4,000 tax rebate.

The $437 billion Inflation Reduction Act will bring some large and small changes to the US auto industry and Auto Dealers. The bill includes incentives to help automakers speed up production of ‘clean vehicles’ and tax breaks for EV buyers. 

Major Take Aways: 

  • Used EVs $25,000 and under get to join the rebate party. 

A $4,000 credit for used EV begins after Dec. 31, as long as the buyer’s income tops out at $75,000 for a single-filing taxpayer or $150,000 for joint filers.

 

  • Starting in 2024, Buyers of new and used EVs will be able to apply their rebate tax credit at the point of sale equal to the value of their credits at registered Dealerships.  

 

  • Elimination of the cap on how many EVs are eligible for rebate tax credits.  

Under the old policy, only the first 200,000 EVs sold by a given manufacturer qualified for the credits.  GM, Toyota and Tesla have been fighting the old provision for some time, since their EVs did not quality anymore. In 2023, their vehicles will be eligible again -- as long as they meet the new North America and mineral-source requirements.

 

  • Fleets get a break, too. Commercial vehicles that aren’t powered by an internal combustion engine can qualify for a maximum $7,500 tax credit, with some of the value determined by weight restrictions.

 

The bills includes some ‘made in America’ provisions that may seem counter intuitive and will most certainly hamper sales for a few years, but will incourage more U.S manufacturing in the EV space in the long run. In 2024, only EVs with at least 40 percent of their minerals from the United States or nations with U.S. free trade agreements, or with materials recycled in North America, would be able to take full advantage of the reconciliation bill’s incentive. Cars would also need components manufactured in North America. 

The bill was passed by the 117th United States Congress and signed into law by President Joe Biden on August 16, 2022. 

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Last modified on Thursday, 25 August 2022 14:38