Renner Individual News; September 7, 2022
As we drive into the future, it seems inevitable that we’ll be doing so in electric vehicles.
Electric vehicles represent less than 1% of vehicles in the U.S. today, but the numbers continue to rise exponentially. At the end of 2021, more than 10 million vehicles worldwide were battery electric vehicles.
Future owners of electric vehicles could benefit from a tax credit of up to $7,500 if certain conditions are met.
New Legislation Enacted
The 2022 Inflation Reduction Act, which was enacted August 16, includes extension and modification to tax credits for clean vehicles. The credit for the purchase of new clean vehicles, which includes plug-in electric and fuel cell vehicles, is extended through 2032, and modified.
The legislation eliminates the current credit’s limitation on the number of vehicles produced by a specific manufacturer. For instance, the EV credits for Tesla vehicles expired for vehicles acquired after 2019 and for GM vehicles acquired after March 31, 2020.
If you buy a qualifying vehicle from Tesla or GM after Dec. 31, 2022, you would be eligible for the EV credit.
“It’s worth it, a $7,500 credit to offset tax,” Mr. Renner said. “If (you) have a $10,000 (tax) bill, you only have to pay $2,500. So it’s definitely worth it.”
The Inflation Reduction Act imposes sourcing requirements on the critical components of the vehicle and battery systems. To qualify for the maximum $7,500 credit, the final assembly of the vehicle must be in North America, at least 40% of the critical minerals contained in the battery must be extracted or processed in the U.S. or in a country with which the U.S. has a free trade agreement in effect, and at least 50% of the battery components must be manufactured or assembled in North America.
Other Helpful Details
The Department of Energy’s Alternative Fuels Data Center (AFDC) has developed a list of Model Year 2022 and 2023 electric vehicles that likely meet the North America final assembly requirement, available here.
A new credit of up to $4,000 is also available for the purchase of a previously owned clean vehicle, subject to income limitations, through 2032.
The new clean vehicle credit generally applies to vehicles placed in service after Dec. 31, 2022. The clean vehicle credit terminates for vehicles placed in service after Dec. 31, 2032.
You may elect to claim the new qualified plug-in electric drive motor vehicle credit for a new qualified plug-in electric drive motor vehicle that was placed in service after the date the clean vehicle credit was enacted, if you purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle after Dec. 31, 2021, and before the date the credit was enacted, and placed the vehicle in service on or after the date the credit was enacted.
There’s more to know about this. Contact Renner and Company here to learn more about the electric vehicle tax credit.
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