How the climate bill could save you money on an electric vehicle
The new Inflation Reduction Act lowers consumer costs for climate-smart living. From consumer home energy rebate programs to tax credits for clean manufacturers, this bill provides incentives to switch to sustainable options.
So, what does this mean for electric vehicles? Well, if you have been considering purchasing an electric vehicle, now is the time. Here’s why.
Switching to an electric vehicle is an impactful way to cut your carbon footprint, but many EV’s are too expensive for the average American family. Tax credits could help alleviate the hefty cost.
Both new and used EV’s are eligible for the credit. Up to $7,500 is available for the purchase of a new EV for single filers that make less than $150,000, heads of households that make less than $225,000 and joint filers that make less than $300,000 per year.
Up to $4,000 in tax credits is available for those interested in buying a used EV beginning in 2024. Plus, tax credits will be applied at the time of sale so you don’t have to worry about tax filing complications.
No More Threshold
Current EV tax credits put a 200,000 sales cap limit on the credit, meaning credits could only apply for the first 200,000 of a model sold. Updated credits through the new climate bill eliminate this 200,000 vehicle sales cap starting in 2023. Although it isn’t eliminated until 2023, there are still options for those looking to get the tax credit in 2022. You can still get the credit on the vehicles listed here.
For bigger electric vehicles such as trucks, SUVs, and vans, there is an $80,000 price limit to receive a tax credit. For smaller electric vehicles, the price limit is $55,000. The final assembly of the vehicle must be in North America, and there are new battery supply rules. 40% of the metals used in an EV battery must come from North America or a country that the U.S. has a free-trade agreement.
The credit amount received is based on the capacity of the battery used to power the vehicle. This means some plug-in hybrid models can qualify. To see how much credit you can get, visit fueleconomy.gov.
Heavy-Duty EV Incentives
The U.S has over 4 million heavy-duty trucks that collectively emit around 260 tons of greenhouse gases. The Inflation Reduction Act has implemented a Qualified Commercial Clean Vehicle tax credit that makes owning an electric heavy or even medium duty truck more economical than a gas-powered truck.
The Qualified Commercial Clean Vehicle tax credit will provide up to $40,000 in tax credits, making electrification more lucrative. According to top markets reports, the electric commercial vehicle market is expected to grow from 353 thousand units to 3,144 thousand units by 2030.