Electric Vehicle Tax Credit

 |  IRS, Tax Credits, Tax planning

On August 16, 2022, the IRS outlined tax benefits for current and future owners of electric vehicles. If you are interested in claiming the tax credit available under section 30D (EV credit) for purchasing a new electric vehicle after August 16, 2022, the date that the Inflation Reduction Act of 2022 was enacted, a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America, known as the final assembly requirement.
The IRS notes that the Department of Energy has provided a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the final assembly requirement. Because some models are built in multiple locations, there may be vehicles on the Department of Energy list that do not meet the final assembly requirement in all circumstances.
The manufacture location for a specific vehicle can be found by searching the vehicle identification number, VIN, of the vehicle on the VIN Decoder website for the National Highway Traffic Safety Administration. The website, including instructions, can be found at VIN Decoder.
Vehicles Purchased Before August 16, 2022
If you entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022, for example, because the vehicle has not been delivered, you may claim the EV credit based on the rules that were in effect before August 16, 2022. The final assembly requirement does not apply before August 16, 2022.
Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022
If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply, including those involving the manufacturing caps on vehicles sold.
Future Guidance
Beginning in 2023,  the Inflation Reduction Act of 2022 significantly changes the eligibility rules for tax credits available for clean vehicles. More guidance is forthcoming from the IRS and Department of the Treasury in coming weeks.

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