New Electric Vehicle Tax Credit Now Available New Year’s Day

December 21, 2022

A delay by the Treasury Department in drawing up rules for tax breaks means people who buy an electric vehicle (EV) could get a new, big tax credit starting January 1.

Treasury said late Monday it won’t finish the rules that govern where battery minerals and parts must be sourced until sometime in March. This means EVs assembled in North America, with batteries made in the U.S., Canada or Mexico will be eligible for a $7,500 tax credit under the Inflation Reduction Act, which Biden signed into law in September.

Under the new law, batteries’ minerals and parts must come from North America or a country with a free-trade agreement with the U.S. in order to get the full tax break, but that provision has been temporarily put on hold.

Meanwhile, most automakers say they won’t be able to comply with the battery component requirement to get the full tax break. General Motors, for example, said that it expects its EVs to only get a half-tax credit, or $3,750, until at least 2025—meaning people who buy a GM EV early next year before new rules are announced could pocket the full $7,500.

Other requirements, like new caps on a buyer’s income and price of the EV, will still take effect Jan. 1.

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