Treasury, IRS Issue Guidance on New Electric Vehicle Tax Credit
WASHINGTON — The Treasury Department and the Internal Revenue Service issued new guidance Tuesday on changes to the tax credit for electric vehicles now that President Joe Biden has signed the Inflation Reduction Act into law.
While the reforms in the act will cause the tax credit for EVs to evolve considerably over time, the most immediate impact will be from its North American final assembly requirement, which went into effect Wednesday morning.
Under the new law, consumers can claim a tax credit of up to $7,500 after they purchase an eligible vehicle.
In order to determine whether a vehicle’s final assembly occurred in North America, dealers and consumers can first check the Energy Department’s Alternative Fuels Data Center website, which includes a list of the model year 2022 and 2023 electric vehicles that likely meet the North America final assembly requirement.
Second, to identify whether a specific vehicle’s final assembly occurred in North America, dealers and consumers should enter the 17-character Vehicle Identification Number into the National Highway Traffic Safety Administration’s VIN Decoder tool.
Dealers and consumers can refer to the plant information field at the bottom of the page result, which expressly lists the build plant and country for the searched vehicle.
Administration officials said Tuesday that individuals who entered into a written binding contract to purchase a new qualifying electric vehicle before Aug.16, but do not take possession of the vehicle until on or after Wednesday can claim the EV credit based on the rules that were in effect before the Inflation Reduction Act’s enactment.
The Internal Revenue Service provides information on “written binding contract” here.
Looking ahead, officials said the Inflation Reduction Act will make several additional changes to the EV tax credit that will take effect starting in 2023.
The Treasury Department and the Internal Revenue Service both said they will release more information about additional tax credits under the Inflation Reduction Act in the weeks and months ahead.