This article is taken from user Nadrealista and Chris Stidham at vwidtalk.com, referencing the Inflation Reduction Act as written Aug 7th, 2022. Full text here.
New Vehicle Credit:
Manufacturer caps eliminated
Credit applies for vehicles purchased beginning January 1, 2023
Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023
Vehicle must be assembled in North America to qualify for new credit
North American assembly requirement applies to vehicles sold after the date of adoption of the bill
$7,500 credit is broke into two binary pieces meaning the vehicle either qualifies for each piece of the credit or it doesn’t. No longer based on size of battery
$3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.
The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US
The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027
The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029
The government has until the end of the year to develop guidance on the battery requirements
Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. One credit per vehicle
Modified gross income limit of $150k for individuals, $225k for head of household, and $300k for joint returns. Definition of MAGI. MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles.
Dealer can apply credit at time of sale. Dealer must disclose to buyer the MSRP of the vehicle, the applicable tax credit amount and the amount of any other available incentive applicable to the purchase
Credit terminates December 31, 2032
Used Vehicle Credit:
Tax credit of 30% of value of used EV with $4,000 cap
Used vehicle must be at least two model years old at time of sale
The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit
Used vehicle must be purchased from a dealer
Used vehicle price must be $25k or less
Used vehicle qualifies for tax credit only once in its lifetime
Purchaser must be an individual (no businesses) to qualify for used credit
Purchaser may only claim one used vehicle credit per three years
Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns
Credit may be applied at time of sale by dealer
Credit terminates on December 31, 2032