Tax season is just around the corner, and this year it will mean a lot to some electric vehicle owners. The Internal Revenue Service (IRS) recently released a list of electric cars that are eligible to receive the full $7,500 federal tax credit after changing eligibility requirements starting April 18. However, this roster has now been greatly reduced, as just six vehicles qualify for this new rule.
The change in qualifications comes down to the battery of the vehicle. Any electric car that has a battery that is not 50% produced or assembled in the United States, or if the battery includes minerals or other components sourced from China, will not receive the full or half benefit of this federal tax break. Some manufacturers, including Tesla, Chevy, and Ford, have reworked their vehicle batteries to meet the new eligibility requirements in order to make their vehicles eligible for the full $7,500 tax credit.
These six vehicles that make the cut for the full tax credit include the Cadillac Lyriq, Chevy Bolt, Chevy Bolt EUV, Tesla Model 3, Tesla Model Y and the Ford F-150 Lightning. For those who own electric cars that don’t make the cut, there is still the chance to receive a half credit of $3,750; for this, the vehicle must be mostly sourced from the United States and its production must have met certain criteria.
Furthermore, three PHEVs also qualify for the half credit and three more qualify for the full tax credit, including models manufactured by Ford, Lincoln, Chrysler and Jeep. These tax credits are not meant to exclude hybrid technology and are instead put in place to ensure that the components used in the production of the vehicles meet the sourcing requirements needed to qualify for the credit.
As time goes on, the list of eligible vehicles is expected to grow. Companies will need to make changes to their EVs in order to meet the standards set forth by the new rules. As long as their electric cars meet the component sourcing standards, they will be added to the list. Additional growth is also expected due to new trade deals and more sources for materials and components in the United States and other approved countries.
Ultimately, taking advantage of tax credits is an excellent way to save money on the purchase of a new electric car. The best way to make sure you get the maximum credit available is to check the list of eligible vehicles released by the IRS, stay up to date on the rules, and choose cars wisely when buying a new EV.
