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Treasury Department Delay Keeps Full EV Tax Credit In Place A Little Longer

Dec 23, 2022

The Treasury Department recently announced it will not finish establishing the rules that govern where electric vehicle (EV) battery minerals and parts have to be sourced until sometime in March 2023.

The Inflation Reduction Act, passed earlier this year requires EVs to be assembled in North America and the battery minerals and parts to also come from North America in order to be eligible for the full $7,500 tax credit.

As a result of the Treasury Department’s recent announcement, starting January 1, 2023, an OEM’s calculation of the minimum credit for a particular VIN will take into account:

  • The vehicle’s battery capacity (now minimum 7 kWh)
  • The vehicle’s MSRP (< $80,000 for trucks and < $55,000 for light duty cars)
  • The vehicle’s gross vehicle weight (< 14,000 pounds)
  • The vehicle must be finally assembled in North America

If the vehicle meets those requirements, the maximum tax credit will revert back to what it was before August 16, 2022 ($2,500 plus $417 per kWh for 5kWh batteries and up, to a maximum of $7500, a minimum credit of $3751 for a creditable 7 kWh- equipped vehicle and $7500 for a minimum 16 kwh-equipped vehicle).

Section 30D purchasers must fall under the new Modified Adjusted Gross Income (MAGI) caps, must acquire creditable vehicles for use or lease and not for resale, and must have taxable income to successfully claim a credit when they file their taxes.

Lastly, effective January 1, 2023, the per-OEM cap goes away so GM, Toyota (and Tesla) vehicles will be eligible for the EV tax credit again.

NADA will be hosting a webinar at 1:00 PM on December 27, 2022 entitled “What You Should Know About The New Federal EV Tax Credits”.  The webinar will review the vehicles and customers that may be eligible for these tax credits, as well as how dealers can best obtain the information that must be disclosed at the point of sale, how the credits will likely change in the future and how to get additional information. You can register for the free webinar HERE.