Introduction
As the electric vehicle (EV) market continues to evolve, potential consumers must stay informed about the latest federal tax credits that can significantly impact their purchasing decisions. The Inflation Reduction Act, passed by President Biden on August 16, 2022, makes significant changes and recent updates to light-duty EV tax credits when purchased or leased, introduces credits for used EVs, and extends credits for EV charging equipment. These credits provide significant potential savings on electric vehicles, plug-in hybrids, and charging equipment.
Light-Duty EV Tax Credit
The light-duty EV tax credit, now extended through 2032, offers a substantial incentive of up to $7,500 per vehicle. This extension widens the window for millions more consumers to benefit from the credit. While the previous cap had affected automakers like Tesla and General Motors, modifications such as MSRP and income caps, assembly/sourcing requirements, and the option to transfer the credit at the point of sale have been introduced. Some requirements will be phased in over the next few years, offering consumers flexibility in choosing eligible vehicles. Notably, a requirement for a vehicle's final assembly in North America is now in effect.
Used EV Tax Credit
For the first time, federal tax credits are available for used EVs. Buyers can now enjoy credits of up to $4,000 or 30% of the sales price (whichever is lower), provided the sales price is under $25,000, and the vehicle is at least two years old. Income caps also apply, making it a compelling option for those considering the purchase of a pre-owned electric vehicle.
EV Charging Equipment Tax Credit
The federal tax credit on EV charging equipment has been extended through 2032, offering continued incentives for both residential and commercial installations. For individual/residential uses, the 30% tax credit remains unchanged, with a maximum credit of $1,000. Commercial uses now enjoy a 6% tax credit, with an increased maximum credit of $100,000 per unit (up from $30,000 per property). Notably, the equipment must be placed in a low-income community or non-urban area, encouraging the expansion of EV charging infrastructure in underserved areas.
Conclusion
With the extension and expansion of federal tax credits for electric vehicles and charging equipment, now is an opportune time for potential consumers to consider making the switch to electric mobility! Whether opting for a new light-duty EV, exploring used EV options, or investing in charging infrastructure, these incentives make sustainable transportation more accessible and affordable for a broader range of consumers. To learn more about the specifics of these tax credits, go to the Incentives page or shop for an electric vehicle of interest to see which incentives may apply to your specific scenario.