August 15, 2022 – Consumers will finally have a bill that reduces the cost of an eligible vehicle at the time of sale instead of at tax time, a huge win for car buyers looking to reduce their monthly payments as vehicle costs skyrocket.
The act sets the tax credit to a flat $7,500 for new vehicles rather than being calculated based on overall battery capacity. Eligible cars must have an MSRP of under $55,000 to qualify. Eligible purchasers must meet max income requirements.
An estimated 70 percent of new battery electric vehicles being sold today would become ineligible for the tax credit almost overnight due to the sourcing requirements. Vehicles must be assembled in North America, and starting in 2025, any vehicles that have minerals sourced or processed from locations that the U.S. have deemed “countries of particular concern”- namely, China and Russia – would become immediately ineligible.
