![]() This means that buyers won’t need to finance the full price of the car before getting the money back when they file their taxes. Instead, it’s what is known as “cash on the hood,” or a rebate that is applied at the point of sale. Nigro said that this is significant because used vehicles account for the vast majority of vehicle purchases in the country.Įligible used vehicles qualify for a credit of up to $4,000 under the Inflation Reduction Act.Īlso, the new credit is not a traditional delayed tax credit, said Gil Tal, director of the Plug-in Hybrid and Electric Vehicle Research Center at UC Davis. Whereas the original credit only applied to the purchase of new vehicles, the new credit also expands eligibility to used vehicles, said Nick Nigro, founder of Atlas Public Policy and an expert on alternative fuel vehicle financing, policy and technology. The new law allows consumers to get up to $7,500 no matter how many cars have been sold, said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute. The existing federal EV tax credit offers consumers $2,500 to $7,500 in credit for vehicles with a battery capacity of at least 5 kilowatt-hours, but starts to phase out after the manufacturers’ first 200,000 qualifying electric vehicles have been purchased. ![]() How does the new EV tax credit differ from the current one? Here’s what electric vehicle researchers and a tax expert say you need to know about requirements to claim the tax credit, which vehicles qualify and more. READ MORE: California moves toward phasing out sale of gas-powered vehicles by 2035 As the largest market for auto sales in the United States, California’s moves on emissions and climate are broadly influential and a dozen or so other states are expected to follow suit, including Washington and Massachusetts. California regulators on Thursday voted to implement a plan to ban the sale of gasoline-powered cars by 2035, a move intended to divert business instead to EV manufacturers. No matter what, the auto industry is making the transition to electric power. ![]() 1, 2023, actually make most currently available EVs ineligible for the credit. But despite its transformational potential, new requirements in the law that start Jan. energy landscape by making greener technology more affordable for lower- to middle-income consumers, as well as deliver other reforms on drug pricing, tax enforcement and more. The IRA, signed into law last week by President Joe Biden, is poised to revamp the U.S. A federal tax credit included in the Inflation Reduction Act aims to expand access to electric vehicles (EVs), while also introducing new limitations that could make it hard to qualify for now. ![]()
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