January and February may be the best months to buy a new electric vehicle (EV). Before March, there are fewer limitations on qualifying for the full $7500 tax credit.
January and February Rules
Right now and continuing beyond March, tax credits up to $7500 are offered for purchases of clean vehicles (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. All Teslas and all GM vehicles, which had been previously excluded after reaching the federal sales cap, are again eligible. 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 are a price cap (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 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 NewtonEVTaskforce, which aims to help reduce greenhouse gas emissions by encouraging Newton citizens to switch to all-electric driving and renewable energy.
Contact: evtaskforcenewton@gmail.com.
