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Electric Vehicle Tax Credit: How Electric Car Owners Could Benefit from the Cut Inflation Act

Electric car at charging station stock photo

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Electric vehicle (EV) owners could reap the benefits of the stunning deal on climate change and health care reached last week between Sen. Joe Manchin and Senate Majority Leader Chuck Schumer to fight against inflation — the 2022 inflation reduction law.

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The law would give $7,500 in tax credits to electric vehicle owners, but cap wages. For joint filings, it would be $150,000, for the head of the family, $112,500 and for a single taxpayer, $75,000, according to the wording of the bill.

For electric vehicle companies under current law, however, there is a cap of 200,000 vehicles sold for which the credit can be applied, and Toyota was the last automaker to cross it in July. Under the new bill, the cap would be removed, something several automakers have lobbied for.

In June, several CEOs — GM’s Mary Barra, Ford’s Jim Farley, Stellantis’ Carlos Tavares, and Toyota North America’s Tetsuo Ogawa — wrote a letter to Congress calling for the cap to be lifted, saying its removal “will inspire consumers to adopt future electrified vehicles”. options and provide much-needed certainty to our customers and our national workforce,” as GOBankingRates previously reported.

“We remain hopeful that Congress will advance legislation to address energy and economic security that includes an amendment to the electric vehicle tax credit removing the par-[automaker] ceiling,” GM spokesman Matt Ybarra told CNN. “We will review the draft text and look forward to working with Congress on these provisions that would ensure a level playing field for all. [automakers].”

Moreover, under the Inflation Reduction Act, used car buyers could receive a $4,000 credit. However, the sale price of the vehicle cannot exceed $25,000, according to the wording of the invoice.

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Finally, a crucial change would be that electric vehicle buyers wouldn’t have to wait to file their taxes to get the tax credit, according to Sam Abuelsamid, electric vehicle analyst at Guidehouse Insights. Credit would be applied at the time of purchase at the dealership.

“By removing it from the top, you can actually lower your monthly payment,” he told CNN.

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About the Author

Yael Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She has also worked as a VP/Senior Content Writer for major New York-based financial firms, including New York Life and MSCI. Yael is now independent and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Toulouse-Jean Jaurès University, France.


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