The Fundamentals of the New Act

Here are the essential changes introduced:

• The previous limit of 200,000 units for manufacturers to qualify has been removed.
• Base Credit: $4,000 plus $40 per kWh, with a maximum of $7,500 (similar to the existing credit).
• Income thresholds are set at $250,000 for individuals and $500,000 for joint filers.
• Price limits are established: $80,000 for vans, SUVs, and trucks, and $55,000 for other vehicles.
• Starting in 2027, only vehicles assembled in the U.S. will qualify.
• A bonus of $4,500 is available for cars made in domestic union factories (subject to possible changes).
• For used EVs, there's a base credit of $2,000, with an additional $2,000 for those in service before January 1, 2027, provided they have battery packs of at least 40 kWh (effective from January 1, 2022, to December 31, 2031).
• The income phase-out begins at $250,000 for individuals ($500,000 for couples), decreasing by $200 for every $1,000 of income over these limits. The used vehicles must be under two years old and priced below $25,000, with the additional $2,000 for those with at least 40 kWh.

If you meet all these criteria, you could be eligible for a tax credit of up to $12,500. Presently, the only vehicles that fully meet these requirements are the Chevy Bolt EV and the Bolt EUV.

How Does the Tax Credit Function?

The revised regulations have transformed the EV credit from a non-refundable to a refundable credit, which means you could receive money back directly.

Here are a few scenarios illustrating how this works:

• If you owe $5,000 in taxes but qualify for a $7,500 credit, you will receive a check for $2,500.
• If your tax obligation is $0, you will get the full credit amount.
• If you are due $5,000 in taxes, you will get that amount back plus the credit you qualify for.

Currently, there are no available credits left, but with these updates, Tesla and other manufacturers that previously reached their limit will be eligible again. This program is set to last for ten years, with US-made EVs being eligible for the last five years.

Exploring New EVs

Let’s take a look at some of the latest electric vehicles, including models from Tesla, Rivian (R1T), Lightning, and Lucid.

Keep an eye on whether manufacturers employ union workers, as this may significantly impact your eligibility for credits going forward. It's worth noting that the president has recently mentioned Tesla in discussions, a shift from previous conversations.

As we look forward to the future of EVs, I invite you to share your experiences and thoughts on where the industry is headed. If you have questions or comments, please feel free to reach out, and I’ll be glad to engage with you via email.

In this video, "EV Tax Credits: Everything You Need to Know for 2024," we explore the eligibility, incentive amounts, and nuances of the new tax credits for electric vehicles.

The video "2024 EV Tax Credit - Point Of Sale And Eligibility Explained" provides an in-depth look at the point of sale credit and how to navigate eligibility for the 2024 EV tax credit.