With the dawn of the new year, electric vehicle enthusiasts are facing a sobering reality as a significant number of electric vehicles (EVs) no longer qualify for the $7,500 federal tax credit. Effective January 1, 2023, the revised federal requirements have downgraded or eliminated the eligibility of many once-qualified EVs.
As reported by The Verge, major automakers such as Chevrolet, Chrysler, Ford, and Tesla still have models that meet the criteria for the full tax credit. However, not every configuration or model from these manufacturers qualifies, making the list considerably shorter.
What qualifies for the $7,500 tax credit?
For Chevrolet, the Bolt EV and Bolt EUV qualify if purchased as the 2022-2023 model, with the condition that the new vehicle’s price remains under $55,000. Similarly, Chrysler’s Pacifica PHEV qualifies for the 2022-2024 model years, given that the vehicle’s price stays below $80,000. The Ford Lightning with the Stand and Extended Range Battery is eligible for the 2022-2024 model years, provided its cost does not exceed $80,000.
Select configurations of Tesla’s Model 3, Model Y, and Model X also qualify for the full tax credit, subject to specific criteria outlined by the manufacturer.
What qualifies for the $3,750 tax credit?
While some vehicles no longer qualify for the full credit, there are still options eligible for the $3,750 half credit. Rivian’s R1S Dual Large, R1S Quad Large, R1T Dual Large, R1T Dual Max, and R1T Quad Large configurations, along with the Ford Escape Plug-in Hybrid, Jeep Grand Cherokee PHEV 4xe, Wrangler PHEV 4xe, and Lincoln’s Corsair Grand Touring PHEV, make the list for the 2023-2024 model years.
Considering the current market dynamics, meeting the specified MSRP price limits for these vehicles might be a challenging task for potential buyers.
Don’t forget about the used tax credit
While the pool of new qualifying vehicles is limited, buyers can still leverage the used EV tax credit. With income requirements and other conditions, buyers can receive up to 30% of the sale price as a credit (up to $4,000) for used electric vehicles costing less than $25,000.
The tax credit could be instant now
Buyers of qualifying EVs or plug-in hybrids now have the advantage of an instant federal tax credit, thanks to more than 7,000 dealerships offering this option. This allows consumers to immediately use their $3,500 (for used EVs) or $7,500 (for new EVs) tax credit at the time of purchase, rather than waiting until tax season.
The Inflation Reduction Act facilitates this process, providing taxpayers with credits for qualified new and previously owned clean vehicles. Starting Jan. 1, 2024, taxpayers can transfer these credits to eligible entities, making the process more streamlined.
In conclusion, while the pool of EVs qualifying for partial or full credit has shrunk, the ease of obtaining the credit has improved, particularly for purchases made at participating dealerships. The impact on sales of qualifying EVs remains to be seen in the coming months.
