Recent changes to an electric vehicle tax credit passed in the new Inflation Reduction Act aim to rev up the transition.
“Our customers have been talking about transitioning to either a plug-in hybrid or full electric. That conversation is coming up a lot more often,” Jessica Katz, general sales manager at Volvo Cars Manhattan, said.
What You Need To Know
- Congress made changes to a tax credit for electric vehicles as part of the Inflation Reduction Act
- There are new restrictions on the tax credit that are based on income, car price and where electric vehicle was assembled
- There are also now tax credits available for used electric cars — up to $4,000
“The incentive definitely helped with that conversation,” she continued. “Yes, it’s more expensive up front, but remember, the cost of ownership is going to be significantly lower, and then there’s also that tax incentive too.”
It changes a federal electric vehicle tax break that tops out at $7,500 for new cars, and now the credit includes used electric vehicles — $4,000 or 30% of the sale price, whichever is less.
This is on top of a $2,000 New York state rebate.
For consumers, the tax credit is now available at the point of sale, instead of as a rebate.
It covers more cars and models because there’s no longer a cap on the amount of vehicles getting tax breaks.
“Those kind of incentives really do help consumers make that leap into electric vehicles,” Mark Schienberg, president of the Greater New York Automobile Dealers Association, said.
But, the new electric vehicle credit also comes with new restrictions.
There’s no tax break if the car retails for over $55,000 — for SUV or van, $80,000. And if a person makes over $150,000 a year as a single person, there will be no tax break.
“New York — the wage is higher but the cost of living is much higher too,” Schienberg said.
Other restrictions aim to bolster domestic electric vehicle manufacturing: the vehicles must have a final assembly in North America and sources of battery materials must come from the U.S. or free trade partners.
“We’d love to see more of the vehicles produced here in the United States. You can’t flip that on a dime on it, so there is a time lag on it,” Schienberg said.
For Alexia Melendez Martineau, policy manager at Plug In America, she said manufacturers “are ready to rise to the occasion.”
Industry advocates say this will give consumers more options when taking advantage of the tax credit.
“Overall, these are positive changes and we should be really excited about them as consumers,” Melendez Martineau said.