It’s Electric! – The New EV Credit Rules
Fewer carbon emissions, lower fuel costs, better fuel economy…there are many reasons to invest in an electric vehicle. The Federal income tax credit for purchase of electric vehicles being an added bonus. But if you are interested in claiming the tax credit available under section 30D for purchasing a new electric vehicle after August 16, 2022 (which is the date that the Inflation Reduction Act of 2022 was enacted), you will want to read this.
Under the new rules, a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America — the so-called final assembly requirement. The IRS notes that the Department of Energy has provided a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the final assembly requirement. Because some models are built in multiple locations, there may be vehicles on the Department of Energy list that do not meet the final assembly requirement in all circumstances.
So what if you purchased a vehicle before Aug. 16, 2022? If you entered into a written, binding contract to purchase a new qualifying electric vehicle before then but did not take possession of the vehicle until on or after that date (for example, because the vehicle had not been delivered), you may claim the EV credit based on the rules that were in effect before Aug. 16, 2022. The final assembly requirement does not apply before Aug. 16, 2022. If you purchase and take possession of a qualifying electric vehicle after Aug. 16, 2022, and before Jan. 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold).
If you have any questions on this program or Federal income tax credits available for electric vehicles, do not hesitate to reach out!