More EVs made eligible for revised $7,500 tax credit
The Feds had good news for several automakers Friday. The Treasury Department announced that it revised the list of electric vehicles eligible for the $7,500 EV credit under the provisions of the Inflation Reduction Act. Five models that were previously classified as sedans have been moved to the SUV category, which has a higher price threshold, allowing buyers to take advantage of the maximum federal incentive.
Tesla, GM, Ford and other automakers had pressed the Biden administration to update their vehicle definitions after the proposed rules were announced in 2022. Under the $430 billion climate bill approved in August, SUVs can be priced at up to $80,000 to qualify for EV tax credits, while cars, sedans and wagons can only be priced at up to $55,000. The decision raises the retail price cap to $80,000 from $55,000 for the following models:
Why the change? Previously, the IRS based its vehicle classifications on the existing EPA Corporate Average Fuel Economy (CAFE) framework. The revised definitions still come from the EPA, but rather than using the archaic CAFE standards, it relies on the guidelines for creating customer-facing fuel economy labels, which should reduce confusion in addition to opening up new options for shoppers. Regulators are also looking out for those who already made a purchasing decision based on the older guidance.
“Customers who have purchased and placed in service vehicles since January 1, 2023, that qualify under the EPA Fuel Economy Labeling classification standard announced today and who satisfy the other clean vehicle tax credit requirements can claim the credit, including customers with vehicles that did not qualify under the prior EPA CAFE standard,” the announcement said. “All vehicles that were eligible under the MSRP limitations prior to today’s notice remain eligible under the updated standard. Updated information about the MSRP limit that applies has been posted to IRS.gov.”
This article contains reporting by Reuters.
