New Process For Claiming Electric Clean Vehicle Credit
November 29, 2022
In order to reduce carbon emissions and invest in the energy security of the United States, the Inflation Reduction Act of 2022, signed into law by President Biden last August, significantly changes the eligibility rules for tax credits available for clean vehicles beginning in 2023.
Part of the law includes a new step consumers must take in order to claim the tax credit for purchasing a new electric clean vehicle. The new “final assembly requirement” states that a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America.
Does your new electric car qualify? The Department of Energy offers a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the final assembly requirement. However, because some models are built in multiple locations, some vehicles on the list still do not meet the final assembly requirement.
According to the IRS, to find the manufacture location for a specific vehicle, you must search the vehicle identification number (VIN) of the vehicle on the VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA): https://vpic.nhtsa.dot.gov/decoder/
Take note: the final assembly requirement does not apply before August 16, 2022. Therefore, those of you who entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but did not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), may claim the EV credit based on the rules that were in effect before August 16, 2022. Confused? The Internal Revenue Service and the Department of the Treasury will post information and request comments from the public on various existing and new tax credit incentives in the coming weeks and months. Please look for updates on IRS.gov.