WHAT TO KNOW ABOUT EV TAX CREDITS

INFORMATION ABOUT THE MARKETS AND YOUR MONEY.

- KELLEY R. TAYLOR

Ever since the Inflation Reduction Act became law last fall, changes to the electric vehicle tax credit, which are supposed to encourage what the law calls "clean vehicle" use, have turned out to be a mix of good and not-so-good news for some EV industry manufacturers-as well as for EV buyers.

The latest round of rules from the Treasury Department and the IRS, which took effect April 18, further limit the number of electric vehicles that qualify for the full tax credit.

The entire EV fleet from General Motors-including the Cadillac Lyriq and Chevy Bolt EV-appears to be eligible for the full $7,500 tax credit. (GM recently announced that production of the Bolt will stop at the end of 2023.) Some Ford and Tesla models are also eligible (see the table on the next page). Among the EVs that don't qualify for the tax credit are models from BMW, Hyundai, Nissan and Volvo. The list is slightly different for vehicles placed into service after December 31, 2022, and before April 18. For a full list, see https://fueleconomy .gov/feg/tax2023.shtml.

Used EVS (previously owned "clean vehicles" that are at least two years old) have a separate tax credit of up to either $4,000 or 30% of the price of the vehicle, whichever is less.

Claiming the credit. When claiming the EV credit, the IRS says that you can use the lesser of your modified adjusted gross income in the year you take delivery of your EV or your MAGI from the year before you took delivery of the vehicle. (MAGI is the same as AGI for most taxpayers.) But either way, higher-income households aren't eligible.

For 2023, if you're married and filing jointly and your MAGI is more than $300,000, you will not qualify for the EV tax credit. The income cutoff if you're single is $150,000; it's $225,000 if you file as head of household. For all other filing statuses, the EV credit income limit is $150,000.