$7,500 Fed Tax Credit CHANGES in 2023 BIG TIME

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voltamps

Well-known member
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Dec 17, 2020
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233
It appears that the huge bill in Congress, including an overhaul of EV Tax Credits, will pass now. Not absolutely sure of it, but most analysts say it will. Stay tuned to see if this legislation passes:

Federal tax credit for EVs maintained at $7,500
Eliminates tax credit cap after automakers hit 200,000 EVs sold, making GM and Tesla once again eligible
The language in the bill indicates that the tax credit would be implemented at the point of sale instead of on taxes.
In order to get the full credit, the electric vehicle needs to be assembled in North America, the majority of battery components need to come from North America, and contain a certain percentage of minerals from countries with free trade agreements with the US.
A new federal tax credit of $4,000 for used EVs
Zero-emission vans, SUVs, and trucks with MSRPs up to $80,000 qualify.
Electric sedans priced up to $55,000 MSRP qualify.
The full EV tax credit will be available to individuals reporting adjusted gross incomes of $150,000 or less, $300,000 for joint filers.

More details:

New Vehicle Credit:

Manufacturer caps eliminated. (Page 370, line 15)
Credit applies for vehicles purchased beginning January 1, 2023. (Page 386, line 1).
Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023. (Page 386, line 20).
Vehicle must be assembled in North America to qualify for new credit. (Page 366, line 15).
North American assembly requirement applies to vehicles sold after the date of adoption of the bill. (Page 386, line 3)
$7,500 credit is broke into two binary pieces meaning the vehicle either qualifies for each piece of the credit or it doesn’t. No longer based on size of battery. (Page 366, line 6)
$3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.(Page 371)
The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US. (Page 372, line 13)
The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027. (page 371 line 23)
The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029. (Page line 373)
The government has until the end of the year to develop guidance on the battery requirements. (Page 374)
Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. (Page 374, line 20).
One credit per vehicle. (Page 375, line 12)
Modified gross income limit of $150k for individuals, $225k for head of household, and $300k for joint returns. Definition of MAGI (page 375, line 22)
MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles. (Page 377, line 4)
Dealer can apply credit at time of sale. Dealer must disclose to buyer the MSRP of the vehicle, the applicable tax credit amount and the amount of any other available incentive applicable to the purchase. (Page 378, line 6)
Credit terminates December 31, 2032.

Used Vehicle Credit:

Tax credit of 30% of value of used EV with $4,000 cap (Page 387, line 23).
Used vehicle must be at least two model years old at time of sale. (Page 389, line 7).
The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit. (Page 389, line 10).
Used vehicle must be purchased from a dealer. (Page 390, line 3).
Used vehicle price must be $25k or less. (Page 390, line 5).
Used vehicle qualifies for tax credit only once in its lifetime. (Page 390, line 7)
Purchaser must be an individual (no businesses) to qualify for used credit. (Page 390, line 14).
Purchaser may only claim one used vehicle credit per three years. (Page 390, line 20).
Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns. (Page 388).
Credit may be applied at time of sale by dealer. (Page 391, line 15).
Credit terminates on December 31, 2032. (Page 391, line 12).

got all this from Electrek.co https://electrek.co/2022/07/27/senate-moves-forward-ev-tax-credit-reform-tesla-tsla/
 
@goldbrick, This could change a lot of buying strategy (correct spelling is actually "strategery").
It does have some hurdles ahead before passing. Vox had a good article on it ( https://www.vox.com/policy-and-politics/23282983/inflation-reduction-act-kyrsten-sinema-josh-gottheimer ) yet I don't know what the odds are it passes after all. Could get bogged down I guess????
 
Democrats and Republicans are so polarized that nothing of substance ever gets passed, particularly during mid-term elections. I wouldn't hold my breath...
 
alozzy said:
Democrats and Republicans are so polarized that nothing of substance ever gets passed, particularly during mid-term elections. I wouldn't hold my breath...

Republican's don't matter, in this case. Any one Democratic Senator getting sick and not able to vote, that would matter.
 
If Kyrsten Sinema can be convinced to vote for it...... I mean, Manchin caved, maybe Sinema will too(?).
Listening to more "legislative experts", one is saying this reconciliation bill skips filibusters, and is far more likely than ever to pass due to the panic Dems have over losing control of the House & Senate at the end of this year. https://www.gibsondunn.com/inflation-reduction-act-of-2022-would-modify-tax-treatment-of-carried-interests-include-corporate-minimum-tax-and-expand-clean-energy-tax-incentives/

Trying to predict this one ain't E-Z. The genius IQ analysts can comment.
... google it weekly for news on it by using keywords: Did the Inflation Reduction Act of 2022 pass?
 
Trying to predict this one ain't E-Z. The genius IQ analysts can comment.

My two bucks says it passes..... although there are at least 49 people who will find every way they can to scuttle it.
 
voltamps said:
If Kyrsten Sinema can be convinced to vote for it...... I mean, Manchin caved, maybe Sinema will too(?).
Sinema is a Yes vote now. This thing looks very likely.

Some may be sick with covid and I don't know how that's going to affect the final votes. They could maneuver thru that.
 
It all depends on how the bill ends up after reconciliation but yeah, it looks good at this point. Finally, a step in the right direction.
 
Manchin got all kinds of concessions for the energy giants, what will Sinema extract? still a good deal I suppose but....
 
Passed the senate. Goes to the House, where, if somebody has covid, they can proxy vote. House will pass it. Biden signs.

That provision about where the battery rare earth minerals comes from could affect Leaf tax credit amounts.

Leaf uses the typical NMC nickel manganese cobalt positive electrodes. Where do they get it?
It'll be a mystery which batteries source it from horrendous countries or not until the Fed publishes the official table.

LFP batteries don't appear to have a problem going forward.
 
Do you understand when the rebate for used EV goes into effect? I just bought a 2016 Leaf in July. That $4,000 would sure help.
 
raincityetm said:
Do you understand when the rebate for used EV goes into effect? I just bought a 2016 Leaf in July. That $4,000 would sure help.
I admit I haven't been following the used part of the bill that closely but does it mean that basically all used EVs could potentially be worth $4k more after that date? I've got a couple of older('12 and '13) Leafs I'd like to sell to get down on vehicles and I did go online to get a price at Carmax and it was a joke, something like $4k for the '12 and $5.2k for the '13, for vehicles in good condition with well below mileage. I guess I could hold onto them a bit longer if the $4k credit thing might help.......
 
I admit I haven't been following the used part of the bill that closely but does it mean that basically all used EVs could potentially be worth $4k more after that date?

I'd say more like $2000 - $3000 more. The value doesn't go up by the full amount of the rebate, because that would be a zero sum game.
 
Remember the vehicle has to be sold by a dealer. And the credit is $4000 or 30% of the car's value, whichever is less. I think it's going to hurt EV owners since you can't sell it privately. Dealers will buy it for market value, then price it ~$4000 higher and advertise it for $4000 off. If you're a buyer, you'll have to do your research because the used EV credit can only apply once per VIN. That's going to be crazy to keep track of unless the government makes some kind of database of VIN numbers.
 
Triggerhappy007 said:
Remember the vehicle has to be sold by a dealer. And the credit is $4000 or 30% of the car's value, whichever is less. I think it's going to hurt EV owners since you can't sell it privately. Dealers will buy it for market value, then price it ~$4000 higher and advertise it for $4000 off. If you're a buyer, you'll have to do your research because the used EV credit can only apply once per VIN. That's going to be crazy to keep track of unless the government makes some kind of database of VIN numbers.

The dealer probably can't collect the whole credit as profit. Will get some of it, of course.

Remember that there are several different "market prices". Say KBB trade in $7,000, KBB private sale $8,000, dealers selling for $12,000 all before the rebate. Owner can still sell privately, of course. But dealer could offer more than old private sale to get more cars to sell. So some fraction would go to owner, by raising the trade in prices and private sale prices. To sell more, dealer would need to lower price. Exact answer is complex, of course.
 
Triggerhappy007 said:
Remember the vehicle has to be sold by a dealer. And the credit is $4000 or 30% of the car's value, whichever is less. I think it's going to hurt EV owners since you can't sell it privately. Dealers will buy it for market value, then price it ~$4000 higher and advertise it for $4000 off. If you're a buyer, you'll have to do your research because the used EV credit can only apply once per VIN. That's going to be crazy to keep track of unless the government makes some kind of database of VIN numbers.
Thanks for clarifying. In my case I believe my Leafs might be worth around $6-8k?? so if the dealer sold it for $10-12k the end buyer might get $3-$3600 if I'm doing my math correct. As it only applies to dealers then I guess it would only be as much as the dealers were willing to pay and I kind of agree with triggerhappy007 this might actually hurt my prospects of selling as a private party :(
Time to get moving on trying to sell them myself, which I really didn't want to but as I believe my local Carmax and such places seem to be flooded with first gen Leafs, they aren't paying crap!
 
Gotta love the misreporting by CNBC I heard last night. Found a clip of it at https://archive.org/details/CNBC_20220815_230000_The_News_With_Shepard_Smith/start/1680/end/1740.

It also doesn't help with the other negativity. Below is just a copy paste from their auto-generated transcript w/improper caps...
among the losers, they pointed out you have tesla, ford, and gm. that is because tesla, ford, and gm have their assembly lines letty to go right now or they will be in the next couple of years. by comparison, take a look at who are the losers. most notably on this list, you will see the japanese automakers, toyota, and nissan. that is because they don't have immediate plans to build ev's here in the u.s. and by extension that means that for a while, any evs they import into this country they will get the 7500 dollars discount. >> phil, affordability is a huge issue here. four dollars for a gallon of gas is expensive, but $66,000, which is what an electric vehicle is averaging right now, is so much more expensive. how quickly can these companies make enough cars so that the price drops? >> it is going to take some time, because the biggest thing that is driving up the cost of electric vehicles are batteries. and the battery packs, the cells that go into them, and
Emphasis added by me. While the bolded part seems true of Ariya it mostly certanly hasn't been true of US Leafs since 2013.
 
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