Make sure you have the right paperwork before taking delivery of a new electrified or fully electric vehicle in 2023. The Inflation Reduction Act (IRA) has officially entered into effect. Car buyers have new fiscal advantages, but there are a couple of important things you need to know.
Today’s applicable provisions state that some plug-in hybrids (PHEVs), battery-electric vehicles (BEVs), and fuel-cell electric cars (FCEVs, powered by hydrogen) can qualify for a clean vehicle credit of $7,500 tops.
To obtain it, you must buy an eligible vehicle and earn a gross income of $300,000 (per married couple filing jointly), $225,000 for heads of households (unmarried taxpayers that support themselves individually and another person), or $150,000 for any other category of tax filers.
Qualifying vehicles have a set of rules they must respect. For example, the car’s manufacturer's suggested retail price (MSRP) must be $80,000 maximum for SUVs, pickup trucks, and vans or $55,000 for other types of vehicles. Also, they must respect new material sourcing and manufacturing rules. That is why the IRS has compiled together a list of electrified cars from almost all manufacturers.
This already sparked some controversy. For example, Tesla customers found out just recently that eligibility differs a lot between very similar models.
To obtain the tax credit, Americans must file Form 8936 and provide the vehicle identification number (VIN). The most recent variant of the document is available for download at the end of the article. Keep in mind, however, that it could change during 2023. Keep an eye out for related news.
Unless modified sometime soon, these new rules apply until 2032.
But besides having to buy a qualifying hybrid or an all-electric vehicle (be it a BEV or FCEV), you must also pay attention to receiving certain documents. Amidst all these big legislative changes, dealers might forget or not even know about them.
According to Internal Revenue Service (IRS) guidelines, the selling party of a qualifying vehicle for the updated tax credit must hand both the buyer and the IRS a report in which are included details like personal information (of both the buyer and the seller), the VIN, the car’s battery capacity, and a verification that says the taxpayer is going to use the vehicle. The report must also include details regarding the sale, the maximum credit allowable for the car, and a “declaration under penalties of perjury from the seller” which will attest that all the data is correct.
This comprehensive document must be handed to the buyer when the vehicle is purchased. Otherwise, per the IRS, the sale will not qualify.
The selling party must then send this report (and others, if applicable) to the IRS no later than 15 January 2024.
In conclusion, make sure your dealer will provide you with this document that says the car you’re going to buy qualifies for the updated tax credit for clean vehicles. Even though sellers have enough time to make sure the reports are all ready for submission, you’ll need this document when the vehicle is acquired.
To obtain it, you must buy an eligible vehicle and earn a gross income of $300,000 (per married couple filing jointly), $225,000 for heads of households (unmarried taxpayers that support themselves individually and another person), or $150,000 for any other category of tax filers.
Qualifying vehicles have a set of rules they must respect. For example, the car’s manufacturer's suggested retail price (MSRP) must be $80,000 maximum for SUVs, pickup trucks, and vans or $55,000 for other types of vehicles. Also, they must respect new material sourcing and manufacturing rules. That is why the IRS has compiled together a list of electrified cars from almost all manufacturers.
This already sparked some controversy. For example, Tesla customers found out just recently that eligibility differs a lot between very similar models.
To obtain the tax credit, Americans must file Form 8936 and provide the vehicle identification number (VIN). The most recent variant of the document is available for download at the end of the article. Keep in mind, however, that it could change during 2023. Keep an eye out for related news.
Unless modified sometime soon, these new rules apply until 2032.
But besides having to buy a qualifying hybrid or an all-electric vehicle (be it a BEV or FCEV), you must also pay attention to receiving certain documents. Amidst all these big legislative changes, dealers might forget or not even know about them.
According to Internal Revenue Service (IRS) guidelines, the selling party of a qualifying vehicle for the updated tax credit must hand both the buyer and the IRS a report in which are included details like personal information (of both the buyer and the seller), the VIN, the car’s battery capacity, and a verification that says the taxpayer is going to use the vehicle. The report must also include details regarding the sale, the maximum credit allowable for the car, and a “declaration under penalties of perjury from the seller” which will attest that all the data is correct.
This comprehensive document must be handed to the buyer when the vehicle is purchased. Otherwise, per the IRS, the sale will not qualify.
The selling party must then send this report (and others, if applicable) to the IRS no later than 15 January 2024.
In conclusion, make sure your dealer will provide you with this document that says the car you’re going to buy qualifies for the updated tax credit for clean vehicles. Even though sellers have enough time to make sure the reports are all ready for submission, you’ll need this document when the vehicle is acquired.