Fed Incentives: Inflation Reduction Act

New Electric Vehicle Tax Credit

Under the Inflation Reduction Act, the following federal tax credit is applied for new (2023 and on) battery-electric vehicles. Motorcycles are not eligible:

** Up to $7,500 credit for battery > 7kWh **

MSRP Qualifications

To apply, the vehicle must not exceed the following manufacturer suggested retail price (MSRP):

$55,000 max for cars
$80,000 max for SUVs, vans, trucks*

* the IRS has specific definition of what an SUV, van, and truck is.

Income Qualifications

To apply, the taxpayer must meet these modified adjusted gross income (MAGI) requirements:

Single filers: $150,000 max
Head of household: $225,000 max
Married, filing jointly: $300,000 max
Married, filing separately: $150,000

Manufacturing Requirements

And these additional qualifications apply for Qualified Manufacturers. If these requirements are not met, the maximum allowable tax credit is reduced to $3,750 per vehicle:

· Final assembly of vehicle must be in North America.
· 50% of battery components must be produced in North America. This includes battery anodes, cathodes, electrolytes, cells, modules, cases.
· 40% of critical battery minerals must be mined, processed, and recycled in the U.S. or in a free-trade partner country.

Free-trade partner countries with the U.S. include:

· Australia
· Bahrain
· Canada
· Chile
· Colombia
· Costa Rica
· Dominican Republic
· El Salvador
· Guatemala
· Honduras
· Israel
· Japan (maybe)
· Jordan
· Mexico
· Nicaragua
· Morocco
· Oman
· Panama
· Peru
· Singapore