Vehicles Put into Service on or After April 18th, 2023
Starting April 18th, 2023, vehicle tax credits have new restrictions. They now top out at $7,500 and only apply to cars with an MSRP of $55,000 or lower and eligible tax returns with modified adjusted gross incomes exceeding either: PS150,000 for single filers filing alone, $225,000 for head-of-household filers or $300k for married couples filing jointly.
Vehicles sold or placed-in-service prior to April 18th 2023
Tax credits on vehicles sold and placed into service between January 1st, 2023, and April 18th, 2023, remain at $7,500, but their MSRP caps have increased to $80,000 for SUVs, pickup trucks, and vans. Furthermore, this credit becomes phased out when MAGI exceeds $200,000 for single filers or $250,000 for head-of-household filers or $300000 for married couples filing jointly.
Vehicles Purchased Between August 17th, 2022 and December 31st 2022
Vehicles purchased and delivered between August 17th, 2022, and December 31st will qualify for the same tax credit. However, their MSRP cap has been increased to $75,000 for SUVs, pickup trucks, and vans.
Purchases made before August 17th, 2022
Tax credits available to vehicles purchased before August 17th, 2022, vary based on their battery capacity: they range from $2,500 for those with batteries between 5kWh-7kWh in capacity to $7,500 kWh in capacity or higher; there is no MSRP cap associated with these vehicles.
New Requirements for 2023
Alongside changes to the tax credit, 2023 brings new requirements for vehicles that qualify for it. These requirements include:
The vehicle must be assembled in North America and comply with certain critical minerals and battery component requirements.
Conclusion
The federal tax credit for EVs and FCEVs can help you save money when purchasing an electric vehicle, but be mindful of changes made effective January 1st, 2023. When making your purchase decision, be sure to factor the federal tax credit into account.
