If you have considered installing electric vehicle charging stations at your home or business or have thought of purchasing an electric vehicle, you may be able to take advantage of tax credits that were recently updated in the Inflation Reduction Act of 2022.
The Inflation Reduction Act (IRA) of 2022 included several provisions related to electric vehicles (EVs) and related equipment. Tax credits and incentives for EVs and charging stations have existed for some time, but the IRA has updated or extended many of these provisions for vehicles and equipment purchased after December 31, 2022.
Previously, tax credits were available for certain electric vehicles and were phased out once the vehicle manufacturer sold 200,000 of the vehicles for use in the United States. The IRA eliminated the phase out. This allows qualifying consumers the opportunity to take up to the full $7,500 credit, even on the most popular EVs. In addition, the IRA includes a new tax credit for the purchase of a used EV for qualifying taxpayers. The used vehicle credit is up to $4,000 for qualifying vehicles. The credits are subject to income limitations and also require that the final assembly of the vehicle occurs in North America.
The IRA extended and modifies the credit for qualifying EV refueling property. The credit was extended through December 31, 2032. The amount of the credit was increased to the lesser of 30% of the property’s cost or $100,000 per qualifying item. The definition of qualified property was also modified. Beginning in 2023, qualifying property includes charging stations for 2 and 3 wheeled vehicles and, most notably, places certain geographic restrictions on the installed equipment. EV refueling property that is used by a business must meet certain other requirements to be eligible for the credit.
Individuals can take advantage of the tax credits for EV charging stations as well. The installation of a home EV charging station is eligible for a tax credit of 30% of the cost of the property up to $1,000.
Further guidance is expected to be released by December 31, 2022. For more information on how these changes could impact you or your business, or if you will qualify for specific credits, please contact us and a member of our auto dealership services team will be happy to help.