Fewer new cars qualify for $7,500 electric vehicle tax credit. Here are 2 alternatives

by | Apr 18, 2023 | Financial

Uwe Krejci | Digitalvision | Getty ImagesThe number of new electric vehicles eligible for a $7,500 federal tax credit fell by almost half on Tuesday, as new rules issued by the U.S. Department of the Treasury took effect.However, consumers in the market for an electric passenger vehicle can still access a tax break by instead buying a used EV or leasing a vehicle, experts said.The Inflation Reduction Act’s EV requirementsThe Inflation Reduction Act, which President Joe Biden signed in August, is the most ambitious climate-spending package in U.S. history.Among other measures, the law offered tax incentives to encourage Americans to shift to cleaner cars and trucks that don’t burn fossil fuels.It extended an existing nonrefundable tax credit — worth up to $7,500 — through 2032 for consumers who purchase new electric vehicles. But the law also tweaked the eligibility requirements for buyers and automakers.More from Personal Finance:3 ways to cut ‘off the charts’ travel costs, experts sayThis free tax tool may find ‘overlooked’ credits or refunds, IRS saysHere’s Apple’s new 4.15% rate on savings account ranksFor example, as of Aug. 17, final assembly of the car had to take place in North America.The law also directed the Treasury Department to draft two additional rules that apply to the sourcing of car-battery components and critical minerals. Lawmakers’ aim is to encourage carmakers to build batteries using domestic supply chains instead of relying on countries like China for essential parts.Those requirements kick in on April 18 and phase in over a few years. Auto and tax experts had expected the number of EVs eligible for the full $7,500 to fall temporarily as automakers ramp up their supply chains.Before Tuesday, 41 new vehicles from 14 automakers were eligible for at least a partial tax credit in 2023, according to a list compiled by the U.S. Department of Energy.President Joe Biden signs the Inflation Reduction Act of 2022 at the White House on Aug. 16, 2022.Mandel Ngan | Afp | Getty ImagesNow, 22 cars from seven car companies — Cadillac, Chevrolet, Chrysler, Ford, Jeep, Lincoln and Tesla — qualify for at least a partial tax break, about half the number of the original list.Cars manufactured by Audi, BMW, Genesis, Nissan, Rivian, Volkswagen and Volvo no longer qualify for the time being, according to the Energy Department list.Price-conscious consumers who want to buy an electric car or truck and claim a tax break — but don’t see a car they like on the existing list of qualifying new EVs — have other avenues, which come with fewer restrictions.A $4,000 tax credit for used EVs The Inflation Redu …

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[mwai_chat context=”Let’s have a discussion about this article:nnUwe Krejci | Digitalvision | Getty ImagesThe number of new electric vehicles eligible for a $7,500 federal tax credit fell by almost half on Tuesday, as new rules issued by the U.S. Department of the Treasury took effect.However, consumers in the market for an electric passenger vehicle can still access a tax break by instead buying a used EV or leasing a vehicle, experts said.The Inflation Reduction Act’s EV requirementsThe Inflation Reduction Act, which President Joe Biden signed in August, is the most ambitious climate-spending package in U.S. history.Among other measures, the law offered tax incentives to encourage Americans to shift to cleaner cars and trucks that don’t burn fossil fuels.It extended an existing nonrefundable tax credit — worth up to $7,500 — through 2032 for consumers who purchase new electric vehicles. But the law also tweaked the eligibility requirements for buyers and automakers.More from Personal Finance:3 ways to cut ‘off the charts’ travel costs, experts sayThis free tax tool may find ‘overlooked’ credits or refunds, IRS saysHere’s Apple’s new 4.15% rate on savings account ranksFor example, as of Aug. 17, final assembly of the car had to take place in North America.The law also directed the Treasury Department to draft two additional rules that apply to the sourcing of car-battery components and critical minerals. Lawmakers’ aim is to encourage carmakers to build batteries using domestic supply chains instead of relying on countries like China for essential parts.Those requirements kick in on April 18 and phase in over a few years. Auto and tax experts had expected the number of EVs eligible for the full $7,500 to fall temporarily as automakers ramp up their supply chains.Before Tuesday, 41 new vehicles from 14 automakers were eligible for at least a partial tax credit in 2023, according to a list compiled by the U.S. Department of Energy.President Joe Biden signs the Inflation Reduction Act of 2022 at the White House on Aug. 16, 2022.Mandel Ngan | Afp | Getty ImagesNow, 22 cars from seven car companies — Cadillac, Chevrolet, Chrysler, Ford, Jeep, Lincoln and Tesla — qualify for at least a partial tax break, about half the number of the original list.Cars manufactured by Audi, BMW, Genesis, Nissan, Rivian, Volkswagen and Volvo no longer qualify for the time being, according to the Energy Department list.Price-conscious consumers who want to buy an electric car or truck and claim a tax break — but don’t see a car they like on the existing list of qualifying new EVs — have other avenues, which come with fewer restrictions.A $4,000 tax credit for used EVs The Inflation Redu …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
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