ELECTRIC VEHICLE GUIDANCE:
Following passage of the Inflation Reduction Act, the Treasury and Internal Revenue Service published initial information on changes to the tax credit for electric vehicles strengthened by the landmark legislation.
To assist consumers identifying eligible vehicles, the Department of Transportation and Department of Energy published new resources today to help those interested in claiming tax credits for an electric vehicle purchased after the Inflation Reduction Act's enactment on August 16, 2022. Consumers and auto dealers can enter the Vehicle Identification Number (VIN) of a specific vehicle into a site provided by the U.S. Department of Transportation to determine its eligibility. For a broader view of what vehicles may now be eligible for this credit, the Department of Energy published a list of Model Year 2022 and early Model Year 2023 electric vehicles that likely meet the final assembly requirement. The eligibility for a specific vehicle should be confirmed using its VIN number.
The final assembly requirement does not apply until after the Inflation Reduction Act's enactment on August 16, 2022. Individuals who entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), can claim the EV credit based on the rules that were in effect before the Inflation Reduction Act's enactment.
Looking ahead, the Inflation Reduction Act makes several additional changes to the electric vehicle tax credit that will take effect starting in 2023. Treasury and the Internal Revenue Service will release more information about additional tax credits under the Inflation Reduction Act in the weeks and months ahead.
Q: If I signed a contract to purchase an electric vehicle prior to enactment of the Inflation Reduction Act (before August 16, 2022) but have not yet taken possession of the vehicle, will the changes in the Inflation Reduction Act impact my tax credit?
No. If you entered into a written binding contract to purchase a qualifying electric vehicle before the date of enactment of the Inflation Reduction Act (August 16, 2022), the changes in the Inflation Reduction Act will not impact your tax credit. You may claim the credit based on the rules that were in effect before August 16, 2022. The Internal Revenue Service provides information on “written binding contract” here.
