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EV Tax Credits are **NOT** Retroactive – Here's Why



With the recent breaking news about EV tax credits included in the Inflation Reduction Act of 2022, there has been a lot of misinformation spreading on social media. Possibly the most damaging and confusing point is regarding tax credits being retroactive.

The tax credits in this bill ARE NOT retroactive. There is a section in this bill talking about cars purchased after December 31, 2021 and before the implementation of this new bill. That is giving people the option, who qualify for todays credits, to be allowed to take advantage of those credits even if their order does not deliver until after this new law goes into effect.

The removal of the 200k vehicle cap is not effective until after December 31, 2022, and no Tesla or GM will qualify for any type of retroactive credit.

Over the last month, EV Tax Credits have resurfaced as a topic of discussion in congress. As Joe Manchin and Chuck Schumer have been in detailed discussions over the last four weeks, it appears we are finally getting closure on the topic once and for all, or so we thought!

Last night, both Chuck Schumer and Joe Manchin have confirmed agreement to a slimmed down version of the Build Back Better bill called the Inflation Reduction Act of 2022. This slimmed down version includes medical and climate initiatives.

Included in the bill are tax credits up to $7,500 for EV’s that must meet certain battery makeup requirements. Battery minerals and battery component manufacturing have targets of North American content in this new bill.

Additionally, this will be a point of sale bill, meaning that you will get this credit, should you qualify, at the time of purchase in the form of a rebate. The dealer will be the one who recognizes the rebate on your behalf and applies to your purchase.

In addition, used EV’s got a boost in this newest version, which includes up to $4,000 in credit for 2 year or older EV’s that are less than $25k. These used EV’s must be purchased from a dealer to get the credit.

New income limits include $300k for joint filers and $150k for individuals for new EV’s and $150k for joint filers and $75k for individuals for used EV’s.

Finally, MSRP caps are $80k for Trucks, SUV’s and Vans and $55k for all other EV’s.

The total cost of the bill is $433B, which will be paid for by tax increases and enforcement efforts that are proposed to bring in $739B in tax revenues. The bill is reportedly going to reduce the deficit by $300B.

This bill has been morphed to support North American manufacturing and is poised to shape the future investments of the Automotive industry for at least the next 10 years.

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28 Comments

  1. Just curious, when this law will go in effect (or) due for president signature? thanks

  2. I ordered my MYP late 2021 for a 2022 buy/purchase. I finally took position on 31, March 2022. I planned this purchase thinking Biden's BBB was a lock and I would be eligible of the tax credit. That was until Manchin blew it all up in December. Now the "Inflation Reduction Act of 2022" appears to be a lock, and all of us who planned/scheduled our purchase for 2022 to take advantage of the BBB will loose out on the "Tax Credit" we were entitled to and I assume I am not alone in saying, I took out a auto loan to complete the purchase. Since this isn't a final writing of the bill I encourage all of you who are in the same scenario as I am to write your senator and encourage them to have this bill retroactive to all 2022 buyers who meet the language of the current bill. After all, doesn't the Inflation Reduction Act of 2022 has its roots to the BBB and therefore just an agreed amendment to the original BBB. Write/Call you senator…

  3. Do you know if a trade-in would lower the price of an EV with regard to the $80k on an EV truck to qualify for the new tax credit? 🤷🏻‍♂️

  4. I reserved my Model Y last year in November and it was supposed to be delivered June this year. It didn't have a date. Th app just said "June". It's now been pushed back but has an actual date of between November 7 to January 2 2022/2023.

    Since Tesla may not allow me to delay NY purchase I'm actually hoping they push it it back themselves into January 2023 so that I can take advantage of the point of sale tax credit. If not then I'm going to go ahead with talking delivery in November this year especially since I locked my price in early before the hikes…but I'd really love to get that incentive.

  5. Does anyone know if buying my leased car is considered a “used” car for the 4K purpose.

  6. Well that’s suck for me, just took delivery of my MYLR 2 weeks ago waiting for almost a year.

  7. Hmm. So effectively I could cancel my M3LR and now order a MYLR for the same price as my current M3LR price after the tax credit if I take possession in 2023. And only be out $250 deposit. …. hmm

  8. I won’t qualify bc if the income limit – is there any loop holes – like buying it via an LLC or Lease?

  9. Sounds like quite the mess, and it might not even pass, or it could change. Who knows? Thanks for helping to break it all down.

  10. So, if you order a Hyundai IONIQ now AND make less than $150K (as a single filer) in 2021 BUT would make more than $150K in 2022, do you still get a $7,500 federal EV credit?

    How about if you order a Hyundai IONIQ AND make more than $150K in 2021 and also make more than $150K in 2022, do you still get the $7,500 federal EV credit?

  11. For Model 3 LR, Tesla could sell it for less than 55k and then pay 4-5k as add on to unlock extra range as a software unlock feature. That would help customers get the tax rebate.

  12. Our delivery window moved from "October 22-December 17th" to "August 4-August 14th" when I checked earlier today. 😬 crazy! Wish the tax credit was retroactive, but I'm getting a Performance Y for $1k less than the current LR Y price 🤷

  13. I heard there were also new income caps to qualify for this credit, is that true?

  14. That’s a big advantage for most American made evs. However, with most dealers marking up cars $5000 the incentives are muddled up a bit.

  15. When Tesla last raised prices they stated the increase was so large because of their fears over long term inflation. Then Musk took that back saying inflation outlook may not be that bad after all. There is a possibility tesla will adjust pricing to better qualify. Manufacturers are now bombarding the market with new models and chipping away from tesla's dominance. Tesla may also take some standard equipment and make it available as option to be added after purchase – Autopilot could be a $2000 break or something similar.

  16. Thanks for this excellent content! Will the old law expire entirely in 2023? For example what if i buy an ID4 in 2023 and it doesn’t have a North American battery and my income is above the new bills caps. Can i invoke the old law and still get a tax credit

  17. Dang just @ me next time! 😂 I love Gary but he got this one misunderstood. This is unfortunate! Hope they end up changing this before it’s all official!

  18. Is it better to book now or wait for few more months ? Also do you think Tesla might increase price because of this ?

  19. I'm pretty sure I understand it all even less now. 🤣 Which has nothing to do with BTG, but rather with my stupid neanderthal brain.

  20. Really hope they stick to my delivery date of February and March to take advantage of this tax credit if it passes.