Rental and used electric vehicles are now eligible for federal tax credits
The US Treasury Department’s offer to electric car buyers (and global car manufacturers) for the new year is to make more electric cars and plug-in hybrids eligible for federal tax credits worth up to $ 7,500. – including cars built outside North America – as long as drivers lease them or buy used rather than new ones.
Related: What to know before buying an electric car: Buying guide
The revised federal credit program in August 2022 includes three types of EV credits and goes into effect on January 1. 1.
The group extends the old credit to $7,500 for consumers buying new EVs and PHEVs, but imposes new limits on the vehicle’s price and the buyer’s income and will soon add more.
required for supplying batteries and components for EVs.
In addition, since August, he wants to assemble the car in North America.
- The second is a new credit of up to $4,000 for buyers of used electric vehicles.
- One-third is a “market” credit for companies acquiring electric vehicles.
- It offers up to $7,500 for light vehicles (less than 14,000 pounds) and up to $40,000 for heavy vehicles. Importantly, business credit has no origination, pricing, or other credit restrictions for consumers.
- On top of all of that, Treasury Department guidance issued in late December allows small business credit to also apply to consumer car loans; this means that many electric and fuel plugs currently on the market can qualify,
- including those built in Europe or Asia. This money goes to the rental company – the owner of the vehicle – but can be transferred to the buyer in the form of a down payment.
- The new federal law does not affect state and local subsidies available to EV buyers.
A win for global car manufacturers
Motorists in Europe, South Korea, and Japan – who currently manufacture many electric cars in their countries – have strongly protested the restrictions imposed by the new law on the purchase of electric cars.
- , which was put in place to help boost North American production.
- Companies are eager for their rental units to be allowed to get trade credit.
- The decision to allow this is a victory for the drivers of these cars.
- However, its impact remains to be seen – the rental rate for new electric cars is around 10% in Q3 2022 compared to 18% for all vehicles, according to data analyst Experian.Not all automakers approved the lease exemption, including GM,
Tesla, and Toyota. U.S. Senator Joe Manchin, D-W.Va., who supports the new North American production law, said the decision “is based on the desire of companies to find loopholes and be transparent inconsistent with the purpose of the law”.
The rules for new electric car buyers are still in place
- The leased car decision does not reduce the 2023 extended limit on tax credits for new plug-in electric vehicle buyers.
- They aim to encourage the sale of cheap electric cars to wealthy consumers, bring more production to North America and move battery chains here or at least to countries with which the United States has entered trade agreements. empty.
The law also lifted the cap on car sales on Jan. 1, so Tesla and GM cars are eligible again. The IRS has released a list of qualified auto and motor vehicle operators.
The new eligibility rules include:
- The new car will be assembled in North America.
- The facility can be verified with the EV’s vehicle identification number and the Department of Energy’s VIN verification tool.
- Battery capacity must be at least 7-kilowatt hours.
- The weight limit of the vehicle must be less than 14,000 pounds.
- Listed prices for new electric vehicles cannot exceed $80,000 for SUVs, vans, and trucks or $55,000 for cars. The IRS list includes a price cap for each vehicle.
- New car buyers cannot have an income of more than $150,000 for singles, $225,000 for heads of household, and $300,000 for married couples filing jointly.
- The new law, which has been delayed until March, will link eligibility for credit to the supply of batteries and their accessories.
- Half of the credit ($3,750) will be based on battery parts produced or assembled in North America and the other half on parts of the battery’s main mineral (such as lithium) obtained or processed in North America.
- North or in the country. with the US Free Trade Agreement. The minimum margin requirement will increase over the next 10 years of the new credit program.
New EV Loan Used
- Purchases of used electric and hybrid vehicles are increasing on Jan.
- 1 and are eligible for a tax credit of 30% of the sales price, up to a maximum of $4,000.
- Credit also has restrictions, but not for new cars. The IRS has released a list of eligible vehicles, and the credit rules include:
- Battery capacity must be at least 7-kilowatt hours.
- The weight limit of the vehicle must be less than 14,000 pounds. A used EV must be purchased from a dealer.
- Sale price not to exceed $25,000. The model year of the vehicle must be two years before the calendar year of purchase (for example, the model year of 2021 or later if purchased in 2023).
- The credit is only for the first vehicle transfer. Consumers cannot have an income of more than $75,000 for singles, $112,500 for heads of households, and $150,000 for couples.
- Consumers cannot rely on someone else’s tax returns. The buyer can receive an EV credit that can be used once every three years.