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The Internal Revenue Service (IRS) has qualified some Teslas and other electric vehicles for the tax credit effective January 1, 2023. However, beginning in March, the updated rules could reduce the U.S. federal tax credit.
Tesla, Electric Vehicles
Effective January 1, 2023, the Internal Revenue Service (IRS) has qualified an extending list of electric vehicles for the U.S. federal tax credit. Those who decided to lease instead of buying may still qualify for the tax credit on electric vehicles that are not mentioned on the list. However, beginning in March, an update to the rules could reduce the amount of tax credit the buyers of the electric vehicles are expected to receive, as reported by Barry.
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New Rules on The Tax Credit
According to Barry, the Inflation Reduction Act of 2022 is intended to tackle taxes, healthcare, and climate change. Among the taxes it tackles are the tax credits of up to $7,500 on selected electric vehicles mentioned on the 2022 and 2023 lists. For used electric vehicles, a new tax credit of up to $4,000 can be received. However, an update to the rules such as the requirement that new electric vehicles must be made in North America was approved when President Joe Biden signed it into law last August. Fortunately, leasing an electric vehicle instead of buying it could bypass these rules.
A spokesperson from the Treasury Department said that most electric vehicles that are leased are eligible for the $7,500 tax credit minus the requirements needed to qualify for the new tax credit. Among these requirements are the income limitations and the stipulation that the electric vehicles are made in North America. This is because during a lease, the vehicle dealer would receive the tax credit instead of the lessee. In the end, it is at the dealer’s discretion if they decide to hand over the tax credits to the lessee.
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