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IRS Tax Credits For Electric Cars

We've been getting questions about the new tax credits, that became effective on August 16. Let me lay out the new rules.

NEW VEHICLE............Effective 1/1/23, there is a $7500 irs tax credit per qualifying vehicle. To qualify, the MSRP for a sedan can't be more than $55k and for an suv, it's $80k. Also to qualify, your 2023 income can't be over $300k (married joint) or $150k (single).

USED VEHICLE....Effective 1/1/23, the credit is the lesser of $4k or 30% of the car's sales price. Maximum eligible price is $25k. There are also income limits: $150k for married joint and $75k for single.

BOUGHT BEFORE 8/16/22........... If you bought an EV before that date, you are eligible for the existing $7500 credit.

BOUGHT AND DELIVERED BETWEEN 8/16/22 AND 12/31/22............. You're eligible for the existing $7500 credit, as long as the car's assembly was finished in North America. Below is a link to qualifying cars.

TESLA......... If you take delivery in 2022, there's no tax credit because Tesla has already exceeded the 200k unit production cap. But that cap is gone in 2023, so assuming your 2023 income is below the $300k/$150k cap, best to buy next year.

HIGH INCOME...... If you are above the $300k/$150k income caps, and want to buy an EV (other than Tesla), then consider buying an EV this year.

Hope this helps. If you have questions, please let me know.

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