GOING ELECTRIC? WHAT TO KNOW ABOUT THE NEW EV TAX CREDIT.

Aug 10, 2022

The EV tax credit might work differently next year under the Inflation Reduction Act. The existing tax credit worth up to $7,500 for new purchases of battery-electric cars and plug-in hybrid vehicles will be extended through 2032. The bill would create a new tax credit of up to $4,000 for used versions of these cars.

Not everyone will qualify for the tax credit, however. New vehicles must be less than $55,000 MSRP for sedans, and less than $80,000 MSRP for SUVs, trucks, and vans.

*Price and Income Restrictions Apply

For single tax filers with an adjusted gross income of greater than $150,000, the credit will not be available. The same goes for married couples filing jointly, who make greater than $300,000. Individual head of households have an income limit of $225,000.

Income Restrictions Apply

Used electric cars must be at least two model years old and have a price less than $25,000 to qualify

Used car purchases also come with income caps:

• 75,000 for individual filers • $150,000 for joint filers • $112,500 for head of household

Assembly required

For a car to qualify, final assembly must take place in North America. There are also some limitations on where key materials for batteries can come from.

Many electric cars will be ineligible right off the bat, warns the Alliance for automotive innovation

despite the 200,000 sales cap being lifted, allowing companies that crossed the threshold to be eligible again,