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 **
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.
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
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:
· Costa Rica
· Dominican Republic
· El Salvador
· Japan (maybe)