Here’s what you need to know about the new EV tax credit for 2023
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The beginning of the new year means the start of a new electric vehicle tax incentive in the US. Until now, the IRS allowed taxpayers to claim a tax credit of up to $7,500 on a new plug-in vehicle, with the exact amount determined by the battery's capacity in kWh. Additionally, the credit was designed to sunset once a manufacturer sold its 200,000th plug-in, although only Tesla and General Motors ever reached that milestone.
But the Inflation Reduction Act (IRA) of 2022 rewrote the plug-in vehicle tax incentives, and the new rules went into effect at the beginning of January. Now, the tax credit is for "clean vehicles" rather than plug-ins, and it covers fuel cell EVs, some plug-in hybrid EVs, and all battery EVs.
It's a more complex beast now, however. The maximum tax credit is still $7,500, but to qualify, a vehicle must have a battery capacity of at least 7 kWh and a gross vehicle weight rating of less than 14,000 lbs, and it must have undergone final assembly in North America. There are price caps-vans, SUVs, and pickup trucks can't cost more than $80,000, and other vehicles must stay under $55,000 to qualify. There are income caps, too: $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other tax filers.