September 1, 2022 3:48 am

IRS Guidance on EVs Bought in 2022

The Inflation Reduction Act of 2022 changed the rules for electric vehicles. Most of the changes apply starting in 2023. However, at least a new requirement became effective on August 16, 2022, the date the Act was signed into law. It says that a vehicle qualifies for the credit only if the final assembly of it occurs in North America (the “final assembly requirement”). The IRS has provided guidance on EVs bought in 2022:

  • If you purchased and took possession of an EV before August 16, 2022, none of the new rules from the Inflation Reduction Act apply for purposes of claiming the 2022 credit.
  • If you entered into a written binding contract to purchase a new qualifying EV before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (perhaps the vehicle had not been delivered by this date), you may claim the EV credit based on the rules that were in effect before August 16, 2022. The final assembly requirement does not apply before August 16, 2022.
  • If you purchase and take possession of a qualifying EV after August 16, 2022, and before January 1, 2023, the final assembly requirement applies. The other rules in effect before enactment of the Inflation Reduction Act apply. For example, the manufacturer’s 200,000 vehicle cap means that there is no credit for any Tesla or GM EV purchased in 2022 and only a partial credit for a Toyota EV purchased in the fourth quarter of 2022.

The Department of Energy has a list of Model Year 2022 and early Model Year 2023 vehicles at https://afdc.energy.gov/laws/inflation-reduction-act that meet the final assembly requirement. The National Highway Traffic Safety Administration has a VIN Decoder at https://www.nhtsa.gov/vin-decoder, which can be used to verify whether a particular EV meets the final assembly requirement.

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Tax Glossary

Investment in the contract

The total cost investment in an annuity. When annuity payments are made, the portion allocable to the cost investment is tax free.

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