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The EV tax credit loophole could cut rent payments on foreign-made EVs

The U.S. Treasury Department confirmed Thursday that buyers can effectively bypass both the U.S. final assembly process and key mineral requirements for electric vehicles — if those EVs leased.

That means, according to ReutersStarting January 1, automakers that sell their final assembled electric vehicles outside of North America may be eligible for a tax credit of up to $7,500 if applied to leases. subsidized, in an amount equivalent to an alternative to the U.S. Inflation Reduction Act (IRA) requirements and the restructured electric vehicle tax credit.

The move, which has been widely anticipated in recent weeks, will presumably quell some of the trade impediments from other countries that have been forming since the IRA was passed, including the possibility of credit. tax may violate WTO rules.

Meanwhile, the rules remain completely different for anyone planning to buy an electric vehicle outright. In guidance published Thursday, the Treasury Department clarified that as of January 1, 2023, the new rules on MSRP, earnings and final assembly will apply to vehicles. bought. According to the IRA, battery-critical minerals are involved in half of the credit, and the Treasury Department confirmed earlier this month that it is delaying issuing full guidance on that portion of the tax credit.

Ford Mustang Mach-E 2023

Ford Mustang Mach-E 2023

$7,500 down to $3,750 in April?

That could mean that around the first quarter of 2023, many US-made electric vehicles will be eligible for the full $7,500, while after the first quarter most models are eligible. that event would only qualify for $3,750.

Under the new credit, a vehicle’s MSRP cannot exceed $80,000 for SUVs, pickup trucks and vans, or $55,000 for passenger cars. The IRS emphasizes that while the MSRP includes options, “it doesn’t have to be the price you pay”—an obvious explanation that many people will come up with in the face of rampant bulldozing. Under the new rules, buyers must have a household income equal to or less than $150,000 for single filers, $225,000 for head of household, or $300,000 for married couples filing jointly. . Buyers must also purchase the vehicle for their own use, not for resale, and primarily for use in the United States

2022 Tesla Model 3

2022 Tesla Model 3

January 1: $7,500 for Model 3, Model Y, Bolt EV, etc.

With the previous 200,000-vehicle cap lifted, buyers of a GM or Tesla vehicle will likely be eligible for the full $7,500 credit in the new year, as the IRS has now made it clear that, under the IRA, that the new rules will apply to vehicles from these brands.

Until the end of the year, you can still buy an EV or PHEV and claim a $7,500 credit—only if it’s made in the USand does not include GM or Tesla.

So far, the link provided by the IRS—vehicles eligible for the credit beginning January 1st—includes only Ford, Nissan, Rivian, and Stellantis vehicles. But with final assembly and pricing regulations, that list is likely to expand significantly in the coming days.

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