What you need to know
A highly-touted tax credit in the recently-passed Inflation Reduction Act is meant to incentivize Americans to purchase electric vehicles or other clean burning fuel vehicles. The bottom line, however, is that practically speaking YOU CAN’T GET IT.
Why few credits will be seen
As the new legislation is currently written, nearly all the electric vehicles sold today do not qualify for the new credit that begins in 2023. This is because:
Tax code as behavior modification
The new electric vehicle tax credit is a classic example of the continued shift from using income taxes to pay for federal spending to using the tax code to get us to do what the government wants. In this case:
What this means for you
What this means for the average consumer is little to anything…right now. If you have your sights set on getting an electric vehicle, make the decision without the influence of the credit. If maximizing the credit is important for you, you now need to pay attention to income limits and will need to wait for some time to see if the credit influences manufacturers to change their sourcing and assembly plans.
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Mia Verc, CPA; Janice Papais, CPA
To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!