These 5 EVs Qualify for the New Federal Tax Credit
The 2022 EV tax credit has many people ready to buy their first EV. The problem is that not all vehicles qualify for the new credit, begging the question: which EVs qualify for the new tax credit, and which don’t? There’s also a new EV credit for used electric vehicles, which is a huge difference from the old federal tax credit for electric vehicles.
What’s New in the EV Credit?
First things first, the vehicle you purchase MUST be assembled in North America for the vehicle to qualify for the 2022 Clean Vehicle Credit. Right off the bat, this disqualifies a huge number of EVs from the credit and most likely has manufacturers scrambling to see how they can get in on the credit. Not only this, but new rules are coming in 2023 (and beyond) concerning the battery of an EV and the sourcing of its materials, and where it’s assembled.
This means that many vehicles will only qualify for a partial tax credit in 2023 and beyond if the adequate percentage of the materials in the battery aren’t sourced as stipulated by the bill. The good news is that if you entered into a legally binding agreement to purchase an EV before August 16, 2022, the government is allowing you to go ahead and purchase the vehicle abiding by the old rules, even if you take delivery of the vehicle after August 16, 2022.
The weirdness begins if you purchase a vehicle after August 16, 2022, but before January 1, 2023. In this case, the same rules of the old EV credit apply to your purchase (including the fact that some manufacturers’ vehicles don’t qualify due to too many vehicles sold). Not only this but the manufacturing limitation that states that the vehicle must be assembled in North America also applies to your purchase. There are also new limitations on the people that can apply.
If you’re a single filer, the maximum you can earn yearly to qualify for the new EV credit is $150,000. For couples that file joint taxes, the maximum is $300,000 a year. This isn’t that big of a deal and ensures that people that actually need the credit (lower-income individuals) can get some good discounts on their next EV. The EV credit also does away with discounting ridiculously priced EVs. The new credit only applies to sedans priced below $55,000. In the case of SUVs, trucks, and vans, the cutoff is $80,000.
The new EV credit will also do something that certain manufacturers will absolutely love: it takes away the manufacturer cap on how many qualifying EVs they can sell before the tax credit runs out. Now, Tesla, GM, and Toyota can join the party once again. One of the most exciting aspects of the new EV credit is the fact that used cars with a price up to $25,000 can qualify for up to a $4,000 credit. This is all great, but the ironic part is that there’s a possibility that hardly any new EVs will qualify for the full tax credit once the battery restrictions come into play in 2023.
Regardless, at the moment, there are some EVs that you can go out and buy right now that qualify for the tax credit due to meeting the assembled in North America provision and abiding by the old rules as well. Read on to find out which vehicles qualify according to a list provided by the Department of Energy. It’s also worth noting that the US Department of Transportation has provided a Vin Decoder tool to verify the plant that manufactured the vehicle you’re considering buying. Therefore, even if a vehicle is on the list provided by the Department of Energy, you must check it using the VIN tool to ensure it fully meets the criteria.
1. Ford F-150 Lightning
The F-150 currently qualifies for the EV tax credit for vehicles sold between August 16, 2022, and January 1, 2023. According to the list of vehicles assembled in North America by the Department of Energy, the F-150 is currently good to go. Another factor to consider is that Ford is under the total vehicle’s sold cap (for the moment), so the F-150 is one of the best choices if you want to take advantage of the current tax credit, especially if you need an EV pickup.
2. Ford Mustang Mach-E
Ford strikes again with the Mustang Mach-E. The Mach-E is also assembled in North America and under the price threshold, which doesn’t matter at the moment, but will come into play next year. The Mach-E starts at $43,895 and is one of the nicest-looking EV SUVs on the market.
3. Rivian R1T
The Rivian R1T qualifies for the EV tax credit for the moment. But, if you want a Rivian, and are looking to get it a bit cheaper, now is the time to buy it. The R1T (in theory) does qualify in terms of price for next year’s tax credit, but it’s possible that finding a model that slides under that price requirement will prove to be very difficult.
4. Ford E-Transit Van
The Ford E-Transit Van is another great vehicle that qualifies for the tax credit as it currently stands. Again, if you’re considering an EV, buying it now is probably the best bet. Otherwise, due to increased restrictions, you risk only getting a partial tax credit next year.
5. Nissan Leaf
The Department of Energy’s list includes the Nissan Leaf as a vehicle that qualifies for the tax credit, which is great news for people looking to add the Leaf to their stable this year.
The Federal EV Credit Is Complicated
One of the most exciting aspects of the new EV credit is the used EV credit. With the new provisions, you can get a used EV tax credit worth up to $4,000. The vehicle cannot exceed a price of $25,000, and many more restrictions must be met. While the new tax credit as a whole is a great incentive, the credit is absolutely rife with caveats and complications. It’s clear that navigating the requirements for this credit will be more trouble than it’s worth for many people.
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August 27, 2022 at 02:06PM