Biden will sign the Inflation Reduction Act tomorrow, Tuesday, August 16, which means Monday, August 15 is the last day to qualify for the “old” EV Tax credit.
The bill includes many improvements to make the tax credit easier and more available, but its philosophy focuses more on stimulating domestic production of electric cars than on stimulating demand.
The upshot of this is that the day the bill is signed, EVs that are assembled outside North America will no longer qualify for the “old” EV tax credit. There are some other considerations based on battery components, which will go into place later this year when the Treasury issues guidance on them, and income and price cap limitations as well. The bill also raises the cap of 200K credits per manufacturer, but that goes into place at the beginning of next year.
But the bill has a “transition rule” which means that buyers signing a binding purchase agreement can retain access to the “old” EV tax credit by signing a binding purchase agreement the day before the law is signed. As we’ve just learned, since the bill will be signed tomorrow, that means the last chance to get the “old” EV tax credit is to sign a binding purchase agreement today.
The various provisions of the bill have different phase-in times, but currently, the most important is the final assembly provision, which will take effect tomorrow. Other “old” provisions can be claimed by having a binding purchase agreement signed before the bill is signed. Once the bill is signed, any EV order or delivery will be affected by the phase-in times of other provisions of the “new” credit.
For EV buyers who have questions, we put together an article with information on most existing upcoming EVs and what each company is doing to ensure customers retain access to tax credits. You can find that article by clicking here.
Signing an agreement today does not guarantee access to the tax credit, as there are other qualifications necessary to make sure you’ll get it. But if you’ve looked into this issue and think that you qualify today but won’t qualify for the future credit, today is your last chance to sign a binding purchase agreement.
Here’s the White House’s statement on the bill signing, which was just announced moments ago:
President Biden to Sign the Inflation Reduction Act of 2022
On Tuesday, August 16th, the President will sign into law H.R. 5376, the Inflation Reduction Act of 2022, and deliver remarks. This historic bill will lower the cost of energy, prescription drugs, and other health care for American families, combat the climate crisis, reduce the deficit, and make the largest corporations pay their fair share of taxes. In the coming weeks, the President will host a Cabinet meeting focused on implementing the Inflation Reduction Act, will travel across the country to highlight how the bill will help the American people, and will host an event to celebrate the enactment of the bill at the White House on September 6th. Tomorrow’s event in the State Dining Room will be open to pre-credentialed media and pooled for TV. Additional details to follow.
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