CNN
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The Internal Revenue Service has again updated the rules for electric vehicle tax credits starting in 2024, which brings some good and bad news.
The bad news is that fewer vehicles now qualify for federal tax credits, and fewer vehicles qualify for the maximum $7,500 credit.
But there is good news. Many electric and plug-in hybrid models are still eligible for at least a portion of the full tax credit. Also, consumers can get a tax credit on the purchase price of the vehicle at the time of purchase rather than waiting to file their taxes. And, as before, if you lease rather than buy a vehicle, you can enjoy the benefit of tax relief even on non-eligible vehicles.
Many states and municipalities even offer their own incentives for installing electric vehicles and home EV chargers. These IRS changes do not affect those incentives.
Even if electric vehicles are heavily discounted, as they are now, in some cases tax breaks are the only way to get any at all. Incentives for an EV, said Ronald Montoya, consumer advice editor for Edmunds.com. Tesla, for example, doesn't bargain on sticker prices.
“If you look at Tesla, it's one of the most popular EVs, and it's not [give] Any rebates, so the tax credit is very important for Tesla buyers,” he said. “So it depends on the vehicle. But overall, I think they're a big boost for people.
The new rules relate to vehicle parts, specifically batteries and where battery parts are manufactured. In particular, if these parts are made in China, the tax credit will be reduced or completely eliminated.
Many automakers are now building electric vehicle battery plants in the U.S., so even if a particular model doesn't qualify for the full tax credit today, it may in the coming months or years as automakers shift their parts supply chains.
Models are still eligible for the full $7,500 EV tax credit IRS websiteFord F-150 Lightning pickup, Chrysler Pacifica plug-in hybrid minivan and various versions of the Tesla Model 3, Model Y and Model X.
According to the IRS website, some EVs and plug-in hybrids that were eligible for tax credits last year are no longer available. However, the list is subject to change as more automakers complete application processes and change their supply chains.
For example, the Nissan Leaf qualified for a $3,750 tax credit late last year but not this week, the website said. Likewise, Ford Mustang Mach-E owners who took delivery of their SUV last year can receive a $3,750 tax credit, but that model is not currently listed as eligible. New year. The Volkswagen ID.4 qualifies for a full $7,500 tax credit until the end of 2023. However, it is currently not listed as eligible for any Purchase Tax Credit.
Volkswagen spokesman Mark Gillis said the German automaker is in the process of submitting all the necessary documents. The company is “confident” that all model-year 2023 and 2024 ID.4s will eventually qualify.
Nissan said it is working with parts suppliers to meet the new requirements so the Leaf can re-qualify in the future.
For some electric and plug-in hybrid vehicles, whether they qualify for a tax credit and how much depends on the specific individual vehicle and its specific component content. For that reason, the IRS website There is space to enter the Unique Vehicle Identification Number, or VIN, for the vehicle the customer is purchasing or considering.
Whether these new tax credit rules or last year's rules apply depends on when the vehicle was “placed in service,” to use IRS terminology. That means if you sign the documents to buy the vehicle in 2023 but don't take delivery of the vehicle until this year, the new 2024 tax rules will apply. Therefore, if the vehicle is in your possession before January 1, you may not get the tax credit you might have received. On the other hand, if you take delivery of the vehicle in 2023, the prevailing tax credit rules will still apply.
If you take out a lease, you can avail tax relief even for non-eligible vehicles. This is because if you lease, different – and more relaxed – tax rules apply. Instead of going to you, the tax credit goes to the leasing company. But, in many cases, this is passed on to customers as a “lease incentive,” resulting in lower monthly payments.
When considering an electric vehicle, leasing is a good idea anyway, Montoya said. For one, EV technology is still changing rapidly, so someone buying an EV today may want to upgrade to a new car with longer range or faster charging in a few years anyway. Also, leasing helps reduce monthly payments, which are currently too high to purchase a vehicle due to high interest rates.
