January and February may be the best months to buy that new EV. With fewer limitations on qualification for the tax credit that apply before March, it may be worth checking to see if you can purchase your desired model now when the full $7500 tax credit is more likely to be available.
January and February
Right now and continuing beyond March, there are tax credits of up to $7500 for clean vehicle purchases (electric or fuel cell) that are assembled in North America. The Internal Revenue Service has a list of vehicles that manufacturers have determined meet the assembly criterion starting January 1, 2023. Eligible again are all Teslas and all GM vehicles, which had been previously excluded after reaching the federal sales cap. You can also check the assembly point on the vehicle information label affixed to each vehicle at the dealerships, or by entering the vehicle identification number (VIN) at Electric Vehicles with Final Assembly in North America.
Other restrictions on the tax credit include a price cap on purchased vehicles (MSRP $80,000 for SUV, truck, or van and $55,000 for other vehicles) and a purchaser income cap (Modified AGI <$150K if filing individually; <$300K if filing jointly; and <$225K for head of household).
Rule Changes in March
Beginning in March, vehicles must meet additional criteria for “critical mineral mining” and battery manufacturing in order to be eligible for the tax credit. Buyers who meet the rules for January and February can get $3750 if an EV also meets critical mineral mining requirements and/or $3750 if the EV meets certain battery manufacturing requirements, for a total of up to $7500. The details of these new criteria will be released in March.
Incentives for Hybrid Vehicles
Whereas vehicles that are fully powered by battery or fuel cell are eligible for a $7500 tax credit, the credit allowed for plug in hybrid vehicles (PHEVs) depends on battery size, the minimum being 7 kilowatt hours of battery capacity for a credit of $3751.
Incentives for Used EVs
Also new in 2023 are tax credits for used clean vehicle purchases, and these are not subject to the battery requirements that will take effect in March.
Leslie Zebrowitz is co-chair of the Newton EV Taskforce, an organization whose mission is to help reduce greenhouse gas emissions by encourage Newton citizens to switch to all-electric driving and renewable energy. You can reach her at [email protected].