You Can Get $7500 for Buying an EV. But You Need to Act Fast. Tax credits for electric vehicles kick in on January 1. But the source requirements won't go into effect until March, giving buyers a better chance to qualify.
Are you looking to buy an electric car in 2023? The sooner you act, the better.
Starting on January 1, most Americans will qualify for a tax credit of up to $7,500 for purchasing certain new electric vehicles, some plug-in gas-electric hybrids, and hydrogen fuel cell vehicles. The tax credit also extends to used EVs, offering buyers a $4,000 credit.
The tax credits are part of the Inflation Reduction Act (IRA), which includes incentives for Americans to drive electric. The credits will last until 2032.
But there's a catch
Buyers have a two-month window to go electric before the government pulls the plug — or at least makes it a bit more complicated.
Starting in March 2023, the U.S. Treasury Department will require EVs to contain battery minerals and other parts sourced in North America to qualify for a full tax credit. The vehicles must also be built in North America. The government implemented these new source requirements to wean the U.S. off batteries manufactured in China, which now make up 70% of the global supply.
Related: The U.S. Is Way Behind In Driving EVs. How Do We Catch Up With the World?
However, many car manufacturers are not yet ready to meet these new requirements. While new battery plants are rapidly shooting up across America in what's known as the Battery Belt, it will take time to make the EV industry entirely domestic.
Still, buyers of EVs with foreign parts made in China and Russia may still be eligible for half the tax credit — $3750.
Some of the EV requirements will go into effect immediately on January 1, including caps on income and the sticker price to disqualify wealthier buyers.
The details of the tax credits are complicated and in the works, but the U.S. Treasury Department said it would "release information on the anticipated direction" of the rules by December 31.
Related: Toyota Considers Electric Car Reboot Strategy to Compete With Tesla
