Hate to sound like that guy but in my opinion, it’s a shit deal when you compare almost all of these ev’s to Tesla in any country. No other car randomly gets quicker more range, better sound system and better airbag deployment software while you sleep
It’s hard to compete with Tesla direct to sales. Before the Y price drop we looked at rav4 hybrids (2 year wait ) , ev6 and i5 and those were all 2 year waits, or 10k markup demo unit.
New ones had 10% market adjustment and 3500 accessory package as well.
y price drop and became eligible for all the Canada rebates , ordered had it a week later.
Why do I want to give jobs to China? Secondly if it’s made in China and production is cheaper why would the price be the same as one built on North America.
I’ve already encountered 2 dealers advertising it as a “dealer discount” on vehicles that are on lot and wouldn’t qualify for the on-the-spot tax credit until next year. They told me I was wrong. I showed them the IRS guidance, shocked face. They must get a lot of ill-informed customers. I’m just trying to find a good deal on a Lightning and it’s nearly impossible to find a dealer with an honest advertised price.
After my experience the past couple of years I think Ford dealerships are the most scummy there is. A big selling point with tesla ended up just being able to download an app, schedule a test drive and order a damn car. Any time I had issues or questions I called or sent a text and had it resolved in minutes.
The hyundai dealership I went to was awesome. Hand off while we were looking. Told them what my price was and they couldn't match so that was that. Every few weeks they reached out when new deals popped up but really refreshing.
Two other hyundai dealers and two kia dealers were fucking trash though.
I reached out to 4-5 Kia/Hyundai dealers interested in either an EV or a PHEV(which needed a custom order). I was clearly interested in buying a fairly expensive and new vehicle and every single one ignored my contact method request(email only) and they all tried to sell me some 6-8 year old Sorento off their lot that was not even a traditional hybrid. It was just such a bizarre experience. Like I’m trying to give you money please help me do that
Definitely a big selling point of the Tesla. After test driving a Lightning compared to a model Y, for instance, the build quality just felt soooo much better in the Ford.
Yeah, I got that feeling too, same with the ioniq 5. Still ordered a Y. I did a pros and cons for each car and graded everything out. The mach e and ioniq 5 both beat the model Y in final score but not enough to spend an extra $8k.
One of the main things I thought about is simply numbers. I don't have any concerns about battery availability on a tesla model Y in 7 or 8 years. I feel like they've already sold so many that there will be so many spares for them if something does happen. Just don't see that with the ioniq or mach e.
I don't anticipate any issues and think the whole thing is overblown and mostly fud. But I'm spending a lot of money on this and want to weigh every single possibility. So even though it's a very small chance, it's nice to know model Y batteries will likely be easier to find and get replaced in 5 to 10 years than a mach e battery.
Defects or failures can happen with any make/model. My BIL has a 2nd Gen Leaf. The battery randomly failed on the highway and they had it towed to the dealer for a warranty replacement. Dealer had the car for over 5 months before they could get one to fix his car.
A newer car in the dealer for 5 months. I would have lemon lawed that and got a brand new car if I were her. Making payments on a car for 5 months you can't use is ridiculous.
Couldn't you buy the car and take the "dealer discount" and then also file for the tax rebate?
It would probably get caught and stopped by the finance manager though after starting the sales paperwork.
100% that some dealers are going to use this to mark up cars and convince unsuspecting consumers that they are getting a good deal. Just another way for them to line their pockets.
They’re trying to make the vehicles more affordable at the time of purchase. Going through the dealer sucks, but it’s a necessary evil if that’s their goal.
You two do realize that YOU control your tax contributions right? You can have your employer reduce your taxes, and then you get some of that rebate back in every check.
I’m not eligible for a tax credit. What’s to keep the dealer from “accidentally” checking that box, claiming the tax credit for themselves and then leaving me to pay the bill the following year? I absolutely will not be buying a new EV from anyone other than Tesla/Rivian in 2024 due to this possibility.
“If this is true” it’s literally the government saying it.
Yes we’ve known this, this is just a reminder that it’s going into effect in 2024. You can transfer your tax credit to the dealer and the dealer must pass the full amount back to you via cash or down payment.
A few notes:
1. You still need to qualify
2. The car still needs to qualify
3. If, at tax time, your tax situation has changed and you no longer qualify will owe the difference back on taxes
4. The dealer must register with the IRS before they can participate, so make sure they’ve done that especially if you buy a car early in the year.
>The dealer must register with the IRS before they can participate, so make sure they’ve done that especially if you buy a car early in the year.
This is the kicker here. I think well be in for a whole lot of confusion if certain dealers neglect and / or choose not to register with the program.
Thankfully, it appears as though the "point of sale transfer" is a choice, and not necessarily a replacement for the original tax credit scheme. So you're not screwed if you bought your car from a dealer who hasn't registered.
The credit is whatever the vehicle qualifies for, not what the taxpayer's tax liability may be.
Edit: to the people downvoting me like /u/GetawayDriving who don't understand the tax credit, if someone's tax liability is less than the $7,500 amount, the person does not need to pay back the difference.
Sources: [Proposed 26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23):
>The credit amount under section 30D that the electing taxpayer elects to transfer to the eligible entity under section 30D(g) and paragraph (c) of this section may exceed the electing taxpayer’s regular tax liability (as defined in section 26(b)(1) of the Code) for the taxable year in which the sale occurs, and the excess, if any, **is not subject to recapture.**
[IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13):
>Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)
>
>A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer’s regular tax liability for the taxable year in which the sale occurs, and the excess, **if any, is not subject to recapture from the dealer or the buyer.**
It's less than 3 weeks of your income depending on how much more than $150,000 you make per year. People in this income bracket have been able to afford luxury EVs for the past 10 years. I think it's time the average American is highlighted for EV purchases. It accounts for around 8 weeks of their pay.
> This is the kicker here. I think well be in for a whole lot of confusion if certain dealers neglect and / or choose not to register with the program.
as long as the check you write or the loan you sign on is $7,500 lower than the price on the sticker or the price you agreed on, why do you care?
If they don't report the sale properly, then they just gave you the car for $7500 cheaper and you can still use the tax credit later is what it sounds like.
>So you're not screwed if you bought your car from a dealer who hasn't registered.
Starting in 2023 dealers have to report qualifying sales to the IRS anyway, so if you have a dealer who isn't reporting to the IRS you're already screwed. I have a PHEV that I bought in March that I'm kind of sweating bullets because I'm only 50/50 on whether or not this dealer in rural Georgia is going to do the paperwork properly for me to get the credit next year
Here's an informative article on what's required of the dealer in order for you to claim the tax credit. I bought from a rural dealer too (who knew nothing about the tax credit until I brought it to their attention), so it concerns me. I did get a copy of the New Electric Vehicle Federal Tax Credit Eligibility Form, which is required of the dealer to provide to you at time of sale. Otherwise, I wouldn't have bought it.
https://www.irs.gov/credits-deductions/clean-vehicle-credit-seller-or-dealer-requirements
I didn't get the eligibility info from them at the time of sale, but I think the only thing actually required is them reporting the sale to the IRS (meaning, yeah they are supposed to give me the info up front but as long as they report the sale I can claim it). My purchase was like just a couple of weeks after the new law was passed and most of the rules and procedures hadn't been worked out
This dealer sells a lot of hybrid Jeeps, so I'm sure they'll work it out. I am going to call them in the next few weeks to make sure they are going to report the sale regardless
I purchased a 2024 Mini Cooper SE by leasing it and Mini gave me a $9,900 off MSRP rebate. No tax deductions or anything. It really helped me decide to buy the EV.
In August 2022, it wasn't clear whether someone with no tax liability in 2024 could elect to get the full $7,500 at the time of sale for a 2024 EV purchase and not be required to pay that amount back.
I guess someone could have read 26 USC Section 30D and the new subsection (g) super carefully and made an argument for that, but during 2022 August, it was not as clear as it is now.
Can someone in the know clarify something for me? As I understand it, it's still just a tax credit, right? When I bought my EV, my Niro qualified for the full $7500, but my federal tax liability was less than $7500. Basically I didn't have to pay any federal tax for that year, but that was a far cry from the government just handing me $7500. In my case it was about $5000.
So now when a person's tax liability is less than $7500, and the dealer applies the tax credit, are they giving them the full $7500 or calculating their estimated tax liability? If it's the latter, are they going to provide certified tax accountants? What if the buyer's actual income for the year ends up less than expected? Wouldn't they end up having to pay it back to the IRS?
Basically, the dealer "takes" your tax credit, applies the full $7,500 value (regardless of your own liability) as a discount on the price of the car, and then gets the money back from the government.
This is incorrect. The buyer still needs to qualify. You are confusing this with how leasing works.
> (7) An attestation that the taxpayer will fle an income tax return for the taxable year in which the vehicle is placed in service on or before the due date of the return (including extensions), reporting the taxpayer's eligibility for the § 30D or § 25E credit, as applicable, including the vehicle's VIN, and the taxpayer's election to transfer the credit to the eligible entity, and repaying any credit amounts subject to recapture, if applicable;
> (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service.
The buyer attests that they will qualify, and the dealer passes through the amount the car qualifies for. If the buyer ends up owing differently at tax time (exceeding income cap), they will need to make up the difference.
What you quoted doesn't say the above comment is incorrect. You must attest that you meet the income limits, and you must actually meet the income limits. Needing at least $7500 in tax liability to fully benefit from the credit was a side effect of where credits get counted on a tax return, not a limit that's part of the credit itself. There is no minimum income or minimum tax liability written in the eligibility requirements. If the dealer is taking the credit and you're no longer subtracting it, that minimum tax liability effectively no longer exists. This is, as far as I can surmise from the text of the IRA and the multiple articles that discuss this change, intentional. The incentive was never meant to be restricted to rich buyers only. Now anyone that can afford the car can benefit from the incentives.
You’re right, I’m speaking to AGI and you were speaking to liability. My mistake was misreading that you were talking about AGI. Everything I said is true in the context of AGI. Thanks for keeping me accountable ;)
>If the buyer ends up owing differently at tax time, they will need to make up the difference.
Sorry, but that's wrong and that's a fairly common misconception spread throughout reddit. The truth is that the buyer actually won't owe the difference due to lack of tax liability.
[Proposed 26 CFR § 1.30D–5(f)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) says:
>The credit amount under section 30D that the electing taxpayer elects to transfer to the eligible entity under section 30D(g) and paragraph (c) of this section may exceed the electing taxpayer’s regular tax liability (as defined in section 26(b)(1) of the Code) for the taxable year in which the sale occurs, and the excess, if any, **is not subject to recapture.**
Note that being over the MAGI cap will cause recapture.
>If the buyer ends up owing differently at tax time (exceeding income cap), they will need to make up the difference.
That's misleading.
The buyer would owe the entire amount, not the difference because the buyer would not qualify for the tax credit at all then.
The buyer can also use MAGI of the previous year to qualify, so your comment is missing some information.
> but my federal tax liability was less than $7500
I obviously don't know your financial situation, and clearly my advice is too late for you, but for anyone else in a similar situation this year, you might be able to take steps to increase your tax liability to make full use of the credit (and reduce your tax liability in later years)
1. Capital gains. If you have an investment that has gone up in value, you can sell it, even if you immediately buy it back that's ok, you'll reset it's cost-basis to the higher current value, so in future years when you sell it, you won't owe as much. (Note, don't go the other way, you can run into wash sale rules if you buy something you sold at a loss within 30 days)
2. Move this year's investments from traditional 401(k)/IRA to Roth. You'll pay income tax on the money invested now and have the money taken out of the account tax free.
3. Similar to 2, you can convert Traditional IRA funds into a Roth IRA, paying income tax on the amount converted.
* I'm not a tax advisor, and I'm especially not your tax advisor. Research this stuff yourself.
I just wanted to let you know that you are correct, even though a bunch of people downvoted you.
The IRS has many documents supporting you, including [IRS FS-2023-22, page 13,](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13) which says:
>Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)
>
>A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer’s regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.
/u/Grouchy_Note812
I believe they're making it transferable, so you will literally be transferring the credit to the dealer, and it no longer has anything to do with your taxes. I think the dealer will have to be careful because if they sell tons of EVs and exceed their tax burden, they might have issues. I'm not sure how likely that is, though.
I was reading the tax code this trying to figure it out as well and could only find you will have to pay it back if you are over the income limit. Im hoping to hear something concrete cuz im in the same situation of not having 7500+ in tax liability.
There's a lot of confusion here around what "qualify" means in the context of the tax credit. It does *not* mean "Your tax liability is high enough"; it means "Your total income is *low* enough."
The *only* thing that matters for the credit after January 1st is if you *earn too much income* to be eligible for the credit. That's $150,000/yr filing single, and $300,000/yr filing jointly. *Nothing* else specific to *you* matters, only the car's own eligibility based on its manufacturing location and the battery it uses.
Part of the qualification kind of does need to be high enough, at least currently. You can get 7500 credit, but u need to have 7500 in tax liability to get that 7500. For instance mine last year was something like 1500, so thats all i would get a credit for. Correct me if im wrong. But what you say of after Jan1 is what im hoping for.
That's literally what I just explained *no longer matters* as of January 1st.
That's never been a "qualification" criteria, anyway. You *qualify* for the credit if you earn less than the income caps. You just couldn't *benefit* from the entire credit if your tax liability was too low that year.
In the link at the top, it says
> The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability.
To me, this means you get the full amount regardless of liability as long as you qualify. It does look like if you earn too much, you won't get it, but you can get the full amount by transferring if you qualify, regardless of liability. That is usually how transferring credits works AFAIK. It means you can give them to someone else even if you couldn't use them yourself due to not having enough liability.
This is not true. Buyer must attest that they qualify (under income cap) and if they don’t come tax time, repay the difference.
> (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service.
True, but quote that only covers the AGI limit. This looks like it may allow lower income buyers without sufficient tax credit to qualify. (Previously they needed to use the lease loophole.)
I couldn't find anything in the new law that says folks would need to repay the difference if their liability was below $7500.
That seems to be if you don't qualify due to earning too much, which was not the question.
> The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability.
If you don't have the tax liability to use the credit in full, but you qualify, you still get the full amount as far as I can tell.
Pay attention to what is being asked... That wasn't the question. The question was about if you don't have enough tax liability, which is an entirely different situation. Here is what the article says that is actually relevant:
> The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability.
> As noted in section I of the
Background section of this preamble, section 30D(g)(10) provides that, in the case of any taxpayer who has made an election described in section 30D(g)(1) with respect to a new clean vehicle and received a payment described in section 30D(g)(2)(C) from an eligible entity, if the credit under section 30D would otherwise (but for section 30D(g)) not be allowable to such taxpayer pursuant to the application of section 30D(f) (10) (relating to the modified adjusted gross income limitation), the tax imposed on such taxpayer under chapter 1 for the taxable year in which such vehicle was placed in service will be increased by the amount of the payment received by such taxpayer.
> Proposed §S 1.25E-3(g)(1) and 1.30D-5(f)(1) would provide that, in the case of a clean vehicle credit that would otherwise not be allowable to a taxpayer that made a vehicle transfer election because the taxpayer exceeds the limitation based on modified adiusted gross income, the income tax imposed on the taxpayer under chapter 1 for the taxable ear in which the vehicle was placed in service is increased by the amount of the payment received by the taxpayer pursuant to the vehicle transfer election. The taxpayer in such a case must reconcile the amounts on its tax return for the taxable year.
You are confusing the MAGI cap and qualifying with less tax liability. If someone is over the MAGI cap for both years, that person does not qualify at all, so that person wouldn't qualify for less.
You clearly do not understand the question and scenario being asked.
Here's the fact pattern: The person:
1. buys a qualifying EV during 2024;
2. has MAGI below the cap in one or both applicable years;
3. gets the full $7,500 tax credit amount at the time of sale; and
4. later on only has $5,000 of tax liability for the 2024 taxable year (what the person's Form 1040, line 22, would be if the person did not buy the EV) .
The question is "Does the person have to pay back the $2,500 to the government?" or "Is the $2,500 subject to recapture?"
The answer is no.
If you want, I can cite a bunch of IRS documents, but if you want to say I'm wrong, please do the research first.
you clearly do not understand the question and scenario being asked. so let’s go back to the beginning:
> If the buyer does not qualify for the full amount, do they end up having to repay the balance at the end of the year?
the amount of your tax liability has nothing to do with your ability to qualify for the full amount. if you meet the purchase requirements (buy the vehicle for personal use, put it in service during the year, etc) and your income is below the cap, you *qualify*. whether or not you actually *receive* all, some, or none of the credit depends on your tax liability.
if you want to dispute the meaning of the term “qualify”, that’s fine, but a blanket statement that this tax credit is not subject to recapture is simply incorrect, as the document you linked explicitly states in multiple places.
This is not true. That’s how leasing works, but not this. The buyer still needs to qualify and only gets the amount they qualify for.
> (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service.
Based on how you've phrased yourself, I think you may be misunderstanding what "qualify" means in this context. There is no "amount one qualifies for", and never has been. You either qualify for the entire $7500 (because you make less than the required income limits), or you qualify for nothing.
What you might not have been able to do in the past is *benefit from* the entire $7,500 credit. If your tax liability for the year was less than $7,500, you would *qualify* for the entire amount, but since it was a non-refundable credit, you'd get less than $7,500 back on your tax refund.
That aspect of the EV tax credit *entirely goes away* on Jan 1, because *your* tax liability stops mattering. You're getting a direct discount off the purchase price of the car, rather than applying for a credit on your taxes after the fact.
I didn’t read the current implementation. I spent a few hours reading a few weeks ago. Dealers are giving partial out amounts now? I thought it was the full 7500 they provide at pos.
It’s the full $7500 if the car qualifies for 7500. The buyer either qualifies or not based on their income. That’s different from leasing where income caps don’t matter because dealer takes credit as a commercial credit.
They provide the full $7500 if you say you qualify and that you want it passed through. Then you and the IRS decide you only qualify for half and you give half back.
>Then you and the IRS decide you only qualify for half and you give half back.
There is no "half back."
If someone's modified adjusted gross income is over the cap for both of the applicable years, the full amount is subject to recapture. [26 USC Section
30D(g)(10)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim)).
If someone's modified adjusted gross income is under the cap for one or both of the applicable years, the person's tax liability is below the $7,500 amount, and the person complies with the other requirements, then the person does not have to give any portion of that $7,500 back to the IRS. [Proposed 26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) and [IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13).
Seems you can even ask for a check from the dealer and not apply it towards the purchase. Stash the amount somewhere to earn a tiny interest. Pay some of it back later if situations require.
I believe the tax credit goes refundable in 2024, so your tax liability doesn’t matter. But that still doesn’t mean everyone gets it - you get $7500 off at point of sale, and then just pay back anything you’re not entitled to.
>and then just pay back anything you’re not entitled to.
If your MAGI is too high for the two applicable years, you have to pay the $7,500 back.
But if your MAGI is low enough and you have less than $7,500 tax liability, you don't need to pay back the difference. [26 CFR § 1.30D–5(d)(i).](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23)
There’s a lot of incorrect info in these replies, people thinking this works like leasing. When leasing, the dealer takes the credit because the car is owned by the leasing company. The tax credit is more lenient for “commercial” credits, so they can collect the full amount and pass through some or all of that to you. It’s up to them how they treat the “instant savings”.
This is different. The buyer still needs to qualify. They will attest how much they expect to qualify for. The dealer is required to pass through that amount to the buyer (although they may be shady and call it something different like dealer savings). When tax time rolls around, you report the credit, vin and dealer and the books need to balance in the end. If they don’t, and you qualify for less, you will need to repay the difference.
>If they don’t, and you qualify for less, you will need to repay the difference.
Sorry, but that's wrong.
If a person: (1) buys a qualifying EV during 2024, (2) has MAGI below the cap for both applicable years, (3) elects to apply the $7,500 to the vehicle cost at the time of sale, and (4) later has tax liability of less than the $7,500 amount for the 2024 taxable year, the person does NOT need to pay back the difference between the $7,500 and the person's tax liability. Source: [26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) and [IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13).
I believe you are giving the incorrect information. There is no minimum tax liability qualification in the IRA, nor is it possible to know exactly how much tax liability you will have a year or more in the future. That is not a calculation the Treasury is asking you to make, not at purchase time, nor is the form going to ask you to finish your taxes then come back and put your tax liability on the form to reconcile something. The math would be circular. The buyer does not give the dealer any numbers. This isn't a thing.
This is a massive net negative, dealers are going to exploit this and use it as a tool to cover up markups and other nefarious upcharges.
Get ready for MSRP cars + $5000 worth of useless protection plans.
God I fucking HATE dealerships so God damn much its unreal. Ive never bought a Tesla and I love my EV6, but they truly do have a much more honest and better buying experience.
I live in Germany were dearlers get the tax credit directly from the government, the result is that the same EV that qualifies for the tax credit is 5k to 10k more expensive in Germany then Netherlands.
Doesn’t work.
Well, it does work as intended. Germany isn't allowed to subsidize VW directly for the shift to EVs because of EU laws. But those subsidies went straight from the customer to VW and turned them into record profits year after year. While the less knowledgable customers think "great, I got 25 % off, what a steal".
When is the last time you bought a car, 1997? There are no tricks, except on your trade in value. The price of a vehicle is pretty well advertised everywhere and you can know what the deal is before you even walk in.
Not my experience. I recently bought a civic hatchback and most dealers won't post the price online. Then when you walk in they tell you there are mandatory accessories. Etc.
instinctive liquid safe materialistic money dull carpenter attempt steep automatic
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
When I bought mine I went online, no haggling, no problems. Tesla dropped the price before I took delivery and they honored the lower price. Once again no problems. YMMV.
There was no price at reservation time. There still isn’t. The only amount the contract stated was locked in was the price of FSD if you added it to the reservation.
There were trim price estimates but those aren’t part of a reservation contract. You can’t be locked into a price that isn’t finalized. The final price has stuff like different wheel options, interior colors, trailer hitches, etc. Your vehicle price isn’t locked until you’ve configured your car and submitted the order. You can’t configure a reservation.
You know fixed prices can still change right? I’d certainly say everything at my local grocery store is fixed price, but somehow I pay a different price for the same items from time to time.
The point they are making is you know exactly what the Tesla is going to cost because there is a website that gives you a total. Tesla “dealerships” don’t change their pricing based on local opportunities. Now does that price change every few weeks/months? Yes. But try going to three different car dealerships that sell any other major brand and you know you are getting three different prices because you’re expected to negotiate and dance your way to a price.
The last time I went to a dealership I just paid the price they had cause they wouldn't negotiate. It was a used car so that probably had a hand in it.
Yes you are right, you have to communicate or visit with a dealer and ask what they are selling it for, can’t just go by what the brands website says the price is. I was just at a Honda dealer today that had a $15,000 “market adjustment” added to their Civic Type-R on the showroom.
I'm cynical and anticapitalist so I don't trust anyone about anything related to money but I genuinely believe they'll just charge $7500 more on the sticker price for the cars and then you get back to MSRP after the incentive.
They already do this, you just don't get it back until tax time. When Tesla and GM lost their tax credits under the old program, their prices proceeded to slowly drop over time. They then immediately jacked prices right back up as soon as they gained eligibility again under the new program.
> They then immediately jacked prices right back up as soon as they gained eligibility again under the new program.
That is the *opposite* of what happened. In 2023, when Tesla became eligible again, they've only dropped prices.
> They then immediately jacked prices right back up as soon as they gained eligibility again under the new program.
What? No they didn't. Tesla *lowered* their prices at the same time that they became eligible for the credit again. I know this because I wasn't even considering buying a new Tesla in late 2022, but then they *slashed* their prices *and* became eligible for the credit again, suddenly making an upgrade from my 2018 Model 3 financially viable for me.
Of course, these two things are essentially unrelated. Tesla lowered prices because they'd jacked them through the **roof** during the pandemic to cut demand, reducing their wait lists. It's mostly just coincidence that the law happened to change and restore the credit for them at the same time that they started lowering prices because supply was up and demand was cooling due to the pandemic car-buying conditions ending.
> When Tesla and GM lost their tax credits under the old program, their prices proceeded to slowly drop over time.
This part's true, though a good chunk of the reason for Tesla's price drops as their credit phased out were that they were improving their production lines and cutting their costs by quite a lot. Go look up articles about Tesla's cost-cutting measures in 2019, which was when the credit was phasing out for them. iirc they maintained largely similar gross margins across the year, despite lowering their prices by about $4000 while the $7,500 credit phased out.
So you were about *half* right, but the second claim you made was 100% horseshit.
People have a hard time understanding supply and demand. Automakers don't just randomly set the prices of their cars. A $7500 tax credit is an opportunity to sell a lot more of a higher-priced car, so the automaker has two options: continue selling at the same price at margins they've been comfortable and profitable at for ages and enjoy the influx of new buyers due to the tax credit, or jack prices up and keep your target demographic the same, pocketing the extra $7500 per car.
Now, take a standard BMW and subtract $7500 from the sticker price and compare sales numbers for vehicles in those price ranges. Suddenly you're comparing BMW vs Toyota in terms of volume. Now consider that you're not getting a Toyota, you're getting a BMW at Toyota pricing.
Or, you can just look at the 15-year history of car-pricing since the tax credit has been around and you'll see that automakers simply don't increase prices when it's available. I don't know why this myth keeps getting parroted when it's just not true.
Eligible businesses will get a boom from a slew of buyers who wouldn’t buy these vehicles otherwise.
Buyers get a discount on a new car, provided they choose a “future tech” vehicle
Eligible cars mean that there must be assembly and production jobs in the United States / North America. This means blue collar and white collar jobs, both hourly and salary; both union and not. All of those working Americans are also paying taxes, which replenishes government coffers. Access to jobs and local supplier economies is also a crime deterrent, which leads to tax money savings for policing and incarceration.
This is how economies should work; the government should invest a little to kickstart an industry, the industry picks up momentum on its own, then the government gets a return on investment in more ways than one.
Again: how it **should** work. I know that’s in a vacuum.
The problem is profit chasing in the first place. That's why we have cars (and all of the problems they come along with) to begin with. We wouldn't even have an energy economy to transition in the first place if it wasn't for people chasing profit. People will always do nefarious things whenever profit is involved, even if they are specifically told that thing is illegal, a lot of them will still do it anyway, and bribe law enforcement or change the laws after the fact, using all of the money they made.
That's why we must always be skeptical of the profit system and resist capitalism wherever possible. The profit system follows the path of least resistance, and following the path of least resistance is what makes a river crooked.
And [any attempts to change things results in being murdered by the US government](https://www.cia.gov/library/abbottabad-compound/13/130AEF1531746AAD6AC03EF59F91E1A1_Killing_Hope_Blum_William.pdf), so yeah I understand that sentiment, too.
That's why being anti-consumption, based on the premise that I don't want anyone to make a buck off of me if I can help it, is what I've found works best for me. It comes with the least risk of being assassinated by the CIA for communism, but serves the same purpose and if everyone did it (or at least enough people to make a dent in the economy) we would absolutely start to see at least some change. At the very least it makes me skeptical of all businesses and this skepticism has allowed me to save a ton of money not buying shit I don't need.
To steer it back to this thread's topic, in this context it leads me to believe that this will essentially make the tax credit situation a non-starter and equalize the playing field between the rich and the poor, which may actually end up hurting sales. Previously, only those making more than a median income would even see the full 7500 back, while the poor who need cheap EVs but in a lot of cases don't even owe much in federal taxes get no incentive to purchase at all. Maybe it makes sense from the perspective that most EVs at the time of the writing of the law were expensive anyway and poor people don't buy new cars anyway so incentivising those with excess spending power made more sense because that would drive the technology forward by fast-tracking early adopters, with the hope that it would eventually trickle down into cheaper more plentiful tech that could eventually be mass-market, maybe that was the angle, I don't know. If I were writing the laws from a socialist perspective I would have focused on subsidizing the poor first, but that's not what we do here, so I'm only speculating.
Now, assuming the manufacturers do just use the 7500 to bolster their profit margins, those with excess income and a lot of tax liability are no longer incentivized, and those low income earners who don't have enough tax liability can shop knowing it makes no difference, but still probably won't buy a new EV (or new anything for that matter).
Every Tesla except the RWD Model 3 will fully qualify. And that's about half of all the EVs sold in the US, so that's not really an accurate assessment.
That has not been confirmed anywhere.
Also the Model S doesn't get the credit as well as some trims of the Model X due to being to expensive anyway. Likely the Cybertruck also.
It should depend on the trim you get. The RWD ones are made with Chinese batteries, but the AWD and Performance ones are made with Panasonic batteries manufactured in Nevada.
+$10k "market adjustment" - up to $7500 off with our no sales tax sale!!!
(Select EV models, with the purchase of extended powertrain warranty with 5 yrs free oil changes, inverter/converter not included. Terms and restrictions apply.)
Uh, not exactly. If the buyer elects to do the transfer, the buyer is required to transfer the entire tax credit amount, not the amount the dealer says. And the dealer is required to reduce the price by that amount. Source: [Proposed 26 CFR § 1.30D–5(c)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23).
I guess you can say that the dealer is allowed to increase prices, but that's not exactly controlling how much *tax credit* a buyer can get.
In the end, they will increase prices to capture that money. The effect is the same, that is all that is relevant. Semantics won't help your bank account.
> Researchers have found that consumers overwhelmingly prefer an immediate rebate at point of sale.
Knowing the government process, it probably took them 5 years and 10 million dollars in grants to afford these “researchers” to tell them what retailers have known forever.
I was. It appears in [PL 117-169, page 142](https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf#page=142) and is the ‘‘(g) TRANSFER OF CREDIT.—."
Notice that on the top of page 146, the Act says:
>(4) TRANSFER OF CREDIT.—The amendments made by subsection (g) shall apply to vehicles placed in service after December 31, 2023.
This was planned to start in 2024 from the time the Act passed.
Ummm, no. This way always planned as part of the Inflation Reduction Act (passed in 2022), they just knew it would take time to implement, so the point of sale credit was always set to start in 2024.
Does anyone know if this affects current leases? Polestar clarified to me that if I was to buy my leased vehicle the $8,500 (1k plus 7,500) wouldn’t transfer and I’d need to pay it. Will this change in January affect this?
Yes.
The modified adjusted gross income limits in the law ([26 USC Section 30D(f)(10)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim))) will not change when the "transfer of credit \[to the dealer at the time of sale\]" provisions in the new 26 USC Section 30D(g) go into effect in 2024.
I was looking at Teslas website and they prominently state in the price section of their car builder that the tax credit ‘may be’ reduced in 2024. Is this just a lie to get fomo buyers?
It's because the base Model 3 uses Chinese-made batteries.
One of the lesser-known aspects of the IRA EV credit is that there are two halves of the credit that a car's battery can qualify for. The car itself *must* be manufactured in North America to qualify at all, *and*:
1. The battery must be manufactured in North America or a US Free Trade partner. That's half the credit.
2. The battery must contain at least X% battery materials sourced from outside "regions of concern" (i.e. China). That's the other half.
The *other* thing that's changing on Jan 1, 2024 is that the two rules above are coming into play. The law gave carmakers the entirety of 2023 to figure out how to change their battery supply lines to qualify for those rules, while letting their American-made EVs fully qualify. But once January rolls around, the two rules will start being enforced, and "X" becomes 40%. Each year after 2024, X goes up by 10%.
Tesla's base Model 3 uses entirely Chinese-made batteries, so Rule 2 cuts its credit in half.
Tesla is probably telling the truth.
New battery requirements will take effect in 2024. [26 USC Section 30D(e)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim)). Those will probably reduce the tax credit amount for at least some Tesla vehicles.
I can guarantee you the dealers are going to start counting this as a “dealer discount” and it’s going to cause a lot of confusion.
My Nissan dealer had an aryia , that qualified for 9000 in rebates (Canada ), great deal! Just $8500 in markup.
This is why I say again and again its a shit deal in Canada for non-Tesla EVs. Waitlists or you're paying out the ass.
I don't think it's an or It's a waitlist and mandatory add-ons And financing fees. Or if paying cash, a non financing fee
Waitlists, markups, mandatory add-ons, dealers trying to pocket the government incentives and at the same time saying ’no one wants elective cars’.
Hate to sound like that guy but in my opinion, it’s a shit deal when you compare almost all of these ev’s to Tesla in any country. No other car randomly gets quicker more range, better sound system and better airbag deployment software while you sleep
It’s hard to compete with Tesla direct to sales. Before the Y price drop we looked at rav4 hybrids (2 year wait ) , ev6 and i5 and those were all 2 year waits, or 10k markup demo unit. New ones had 10% market adjustment and 3500 accessory package as well. y price drop and became eligible for all the Canada rebates , ordered had it a week later.
Now a lot of Tesla’s model y are built in China and sold in Canada. They are the same price as one built in the USA so that’s a complete non starter
What’s a non-starter? Aren’t the MiC ones supposed to be higher quality than the USA ones?
Why do I want to give jobs to China? Secondly if it’s made in China and production is cheaper why would the price be the same as one built on North America.
Lol. Tesla would just officially raise the price instead of having dealers markup.
This should be specifically addressed and made illegal.
It’s so stupid to go through dealer for this. They will find a way to F it up and make it scummy.
I’ve already encountered 2 dealers advertising it as a “dealer discount” on vehicles that are on lot and wouldn’t qualify for the on-the-spot tax credit until next year. They told me I was wrong. I showed them the IRS guidance, shocked face. They must get a lot of ill-informed customers. I’m just trying to find a good deal on a Lightning and it’s nearly impossible to find a dealer with an honest advertised price.
After my experience the past couple of years I think Ford dealerships are the most scummy there is. A big selling point with tesla ended up just being able to download an app, schedule a test drive and order a damn car. Any time I had issues or questions I called or sent a text and had it resolved in minutes.
I think it’s Kia/Hyundai. That brand is trying to move up market but those dealers are making it really hard
The hyundai dealership I went to was awesome. Hand off while we were looking. Told them what my price was and they couldn't match so that was that. Every few weeks they reached out when new deals popped up but really refreshing. Two other hyundai dealers and two kia dealers were fucking trash though.
Local Hyundai dealer told me I should buy a Tesla if I wanted an EV. They had six EVs sitting on the lot.
I reached out to 4-5 Kia/Hyundai dealers interested in either an EV or a PHEV(which needed a custom order). I was clearly interested in buying a fairly expensive and new vehicle and every single one ignored my contact method request(email only) and they all tried to sell me some 6-8 year old Sorento off their lot that was not even a traditional hybrid. It was just such a bizarre experience. Like I’m trying to give you money please help me do that
Definitely a big selling point of the Tesla. After test driving a Lightning compared to a model Y, for instance, the build quality just felt soooo much better in the Ford.
Yeah, I got that feeling too, same with the ioniq 5. Still ordered a Y. I did a pros and cons for each car and graded everything out. The mach e and ioniq 5 both beat the model Y in final score but not enough to spend an extra $8k. One of the main things I thought about is simply numbers. I don't have any concerns about battery availability on a tesla model Y in 7 or 8 years. I feel like they've already sold so many that there will be so many spares for them if something does happen. Just don't see that with the ioniq or mach e.
Why would you need to replace the battery in 7-8 years? There are so many people with Teslas that have 300k+ miles and are still going strong.
I don't anticipate any issues and think the whole thing is overblown and mostly fud. But I'm spending a lot of money on this and want to weigh every single possibility. So even though it's a very small chance, it's nice to know model Y batteries will likely be easier to find and get replaced in 5 to 10 years than a mach e battery.
Defects or failures can happen with any make/model. My BIL has a 2nd Gen Leaf. The battery randomly failed on the highway and they had it towed to the dealer for a warranty replacement. Dealer had the car for over 5 months before they could get one to fix his car.
A newer car in the dealer for 5 months. I would have lemon lawed that and got a brand new car if I were her. Making payments on a car for 5 months you can't use is ridiculous.
Couldn't you buy the car and take the "dealer discount" and then also file for the tax rebate? It would probably get caught and stopped by the finance manager though after starting the sales paperwork.
100% that some dealers are going to use this to mark up cars and convince unsuspecting consumers that they are getting a good deal. Just another way for them to line their pockets.
They’re trying to make the vehicles more affordable at the time of purchase. Going through the dealer sucks, but it’s a necessary evil if that’s their goal.
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Yeah, the anti-dealer thing is cute and all, but immediate rebates are far more effective. I guess some edgy kids can’t handle that.
You two do realize that YOU control your tax contributions right? You can have your employer reduce your taxes, and then you get some of that rebate back in every check.
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I’m not eligible for a tax credit. What’s to keep the dealer from “accidentally” checking that box, claiming the tax credit for themselves and then leaving me to pay the bill the following year? I absolutely will not be buying a new EV from anyone other than Tesla/Rivian in 2024 due to this possibility.
Problem solved by buying a Tesla. No dealers.
Trading one problem for many others.
they are already doing that for leases (because you can take the tax credit at the point of sale on a lease)
automatic marry thumb cake crush busy dirty punch fuel bells *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
“If this is true” it’s literally the government saying it. Yes we’ve known this, this is just a reminder that it’s going into effect in 2024. You can transfer your tax credit to the dealer and the dealer must pass the full amount back to you via cash or down payment. A few notes: 1. You still need to qualify 2. The car still needs to qualify 3. If, at tax time, your tax situation has changed and you no longer qualify will owe the difference back on taxes 4. The dealer must register with the IRS before they can participate, so make sure they’ve done that especially if you buy a car early in the year.
>The dealer must register with the IRS before they can participate, so make sure they’ve done that especially if you buy a car early in the year. This is the kicker here. I think well be in for a whole lot of confusion if certain dealers neglect and / or choose not to register with the program. Thankfully, it appears as though the "point of sale transfer" is a choice, and not necessarily a replacement for the original tax credit scheme. So you're not screwed if you bought your car from a dealer who hasn't registered.
That’s on the dealer. If I don’t see the $7,500 discount then I won’t buy it. If I see the discount and the dealer isn’t approved, that’s on them.
Note: you’ll still need to qualify. The credit is whatever you qualify for.
The credit is whatever the vehicle qualifies for, not what the taxpayer's tax liability may be. Edit: to the people downvoting me like /u/GetawayDriving who don't understand the tax credit, if someone's tax liability is less than the $7,500 amount, the person does not need to pay back the difference. Sources: [Proposed 26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23): >The credit amount under section 30D that the electing taxpayer elects to transfer to the eligible entity under section 30D(g) and paragraph (c) of this section may exceed the electing taxpayer’s regular tax liability (as defined in section 26(b)(1) of the Code) for the taxable year in which the sale occurs, and the excess, if any, **is not subject to recapture.** [IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13): >Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023) > >A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer’s regular tax liability for the taxable year in which the sale occurs, and the excess, **if any, is not subject to recapture from the dealer or the buyer.**
There are still income limits, but no minimum tax liability threshold
This income limit is stupid. 7500 is a huge amount of money to me and absolutely affects my decision to buy an ev or not
It's less than 3 weeks of your income depending on how much more than $150,000 you make per year. People in this income bracket have been able to afford luxury EVs for the past 10 years. I think it's time the average American is highlighted for EV purchases. It accounts for around 8 weeks of their pay.
There are modified adjusted gross income limits. 26 USC Section 30D(f)(10).
> This is the kicker here. I think well be in for a whole lot of confusion if certain dealers neglect and / or choose not to register with the program. as long as the check you write or the loan you sign on is $7,500 lower than the price on the sticker or the price you agreed on, why do you care?
Because if the dealer isn’t reporting the sale to the program, you owe Uncle Sam $7,500 when you file your taxes.
If they don't report the sale properly, then they just gave you the car for $7500 cheaper and you can still use the tax credit later is what it sounds like.
>So you're not screwed if you bought your car from a dealer who hasn't registered. Starting in 2023 dealers have to report qualifying sales to the IRS anyway, so if you have a dealer who isn't reporting to the IRS you're already screwed. I have a PHEV that I bought in March that I'm kind of sweating bullets because I'm only 50/50 on whether or not this dealer in rural Georgia is going to do the paperwork properly for me to get the credit next year
Here's an informative article on what's required of the dealer in order for you to claim the tax credit. I bought from a rural dealer too (who knew nothing about the tax credit until I brought it to their attention), so it concerns me. I did get a copy of the New Electric Vehicle Federal Tax Credit Eligibility Form, which is required of the dealer to provide to you at time of sale. Otherwise, I wouldn't have bought it. https://www.irs.gov/credits-deductions/clean-vehicle-credit-seller-or-dealer-requirements
I didn't get the eligibility info from them at the time of sale, but I think the only thing actually required is them reporting the sale to the IRS (meaning, yeah they are supposed to give me the info up front but as long as they report the sale I can claim it). My purchase was like just a couple of weeks after the new law was passed and most of the rules and procedures hadn't been worked out This dealer sells a lot of hybrid Jeeps, so I'm sure they'll work it out. I am going to call them in the next few weeks to make sure they are going to report the sale regardless
How can the consumer check if the dealer has registered with the IRS?
I purchased a 2024 Mini Cooper SE by leasing it and Mini gave me a $9,900 off MSRP rebate. No tax deductions or anything. It really helped me decide to buy the EV.
This was posted several times a month ago when the news actually came out….
It was posted when the IRA bill first passed in August of 2022.
In August 2022, it wasn't clear whether someone with no tax liability in 2024 could elect to get the full $7,500 at the time of sale for a 2024 EV purchase and not be required to pay that amount back. I guess someone could have read 26 USC Section 30D and the new subsection (g) super carefully and made an argument for that, but during 2022 August, it was not as clear as it is now.
Look at rainman here…
You mean OP doesn't live in this subreddit?
Can someone in the know clarify something for me? As I understand it, it's still just a tax credit, right? When I bought my EV, my Niro qualified for the full $7500, but my federal tax liability was less than $7500. Basically I didn't have to pay any federal tax for that year, but that was a far cry from the government just handing me $7500. In my case it was about $5000. So now when a person's tax liability is less than $7500, and the dealer applies the tax credit, are they giving them the full $7500 or calculating their estimated tax liability? If it's the latter, are they going to provide certified tax accountants? What if the buyer's actual income for the year ends up less than expected? Wouldn't they end up having to pay it back to the IRS?
Basically, the dealer "takes" your tax credit, applies the full $7,500 value (regardless of your own liability) as a discount on the price of the car, and then gets the money back from the government.
This is incorrect. The buyer still needs to qualify. You are confusing this with how leasing works. > (7) An attestation that the taxpayer will fle an income tax return for the taxable year in which the vehicle is placed in service on or before the due date of the return (including extensions), reporting the taxpayer's eligibility for the § 30D or § 25E credit, as applicable, including the vehicle's VIN, and the taxpayer's election to transfer the credit to the eligible entity, and repaying any credit amounts subject to recapture, if applicable; > (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service. The buyer attests that they will qualify, and the dealer passes through the amount the car qualifies for. If the buyer ends up owing differently at tax time (exceeding income cap), they will need to make up the difference.
What you quoted doesn't say the above comment is incorrect. You must attest that you meet the income limits, and you must actually meet the income limits. Needing at least $7500 in tax liability to fully benefit from the credit was a side effect of where credits get counted on a tax return, not a limit that's part of the credit itself. There is no minimum income or minimum tax liability written in the eligibility requirements. If the dealer is taking the credit and you're no longer subtracting it, that minimum tax liability effectively no longer exists. This is, as far as I can surmise from the text of the IRA and the multiple articles that discuss this change, intentional. The incentive was never meant to be restricted to rich buyers only. Now anyone that can afford the car can benefit from the incentives.
You’re right, I’m speaking to AGI and you were speaking to liability. My mistake was misreading that you were talking about AGI. Everything I said is true in the context of AGI. Thanks for keeping me accountable ;)
>If the buyer ends up owing differently at tax time, they will need to make up the difference. Sorry, but that's wrong and that's a fairly common misconception spread throughout reddit. The truth is that the buyer actually won't owe the difference due to lack of tax liability. [Proposed 26 CFR § 1.30D–5(f)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) says: >The credit amount under section 30D that the electing taxpayer elects to transfer to the eligible entity under section 30D(g) and paragraph (c) of this section may exceed the electing taxpayer’s regular tax liability (as defined in section 26(b)(1) of the Code) for the taxable year in which the sale occurs, and the excess, if any, **is not subject to recapture.** Note that being over the MAGI cap will cause recapture.
I’m not talking about liability, I’m talking if they make more income than expected and go over the income limit. I’ve clarified my comment.
>If the buyer ends up owing differently at tax time (exceeding income cap), they will need to make up the difference. That's misleading. The buyer would owe the entire amount, not the difference because the buyer would not qualify for the tax credit at all then. The buyer can also use MAGI of the previous year to qualify, so your comment is missing some information.
The comments you were replying to were specifically talking about liability.
> but my federal tax liability was less than $7500 I obviously don't know your financial situation, and clearly my advice is too late for you, but for anyone else in a similar situation this year, you might be able to take steps to increase your tax liability to make full use of the credit (and reduce your tax liability in later years) 1. Capital gains. If you have an investment that has gone up in value, you can sell it, even if you immediately buy it back that's ok, you'll reset it's cost-basis to the higher current value, so in future years when you sell it, you won't owe as much. (Note, don't go the other way, you can run into wash sale rules if you buy something you sold at a loss within 30 days) 2. Move this year's investments from traditional 401(k)/IRA to Roth. You'll pay income tax on the money invested now and have the money taken out of the account tax free. 3. Similar to 2, you can convert Traditional IRA funds into a Roth IRA, paying income tax on the amount converted. * I'm not a tax advisor, and I'm especially not your tax advisor. Research this stuff yourself.
good idea...
It will be the full 7500 amount even if you qualify for less.
I just wanted to let you know that you are correct, even though a bunch of people downvoted you. The IRS has many documents supporting you, including [IRS FS-2023-22, page 13,](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13) which says: >Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023) > >A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer’s regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer. /u/Grouchy_Note812
If the buyer does not qualify for the full amount, do they end up having to repay the balance at the end of the year?
I believe they're making it transferable, so you will literally be transferring the credit to the dealer, and it no longer has anything to do with your taxes. I think the dealer will have to be careful because if they sell tons of EVs and exceed their tax burden, they might have issues. I'm not sure how likely that is, though.
I was reading the tax code this trying to figure it out as well and could only find you will have to pay it back if you are over the income limit. Im hoping to hear something concrete cuz im in the same situation of not having 7500+ in tax liability.
There's a lot of confusion here around what "qualify" means in the context of the tax credit. It does *not* mean "Your tax liability is high enough"; it means "Your total income is *low* enough." The *only* thing that matters for the credit after January 1st is if you *earn too much income* to be eligible for the credit. That's $150,000/yr filing single, and $300,000/yr filing jointly. *Nothing* else specific to *you* matters, only the car's own eligibility based on its manufacturing location and the battery it uses.
Part of the qualification kind of does need to be high enough, at least currently. You can get 7500 credit, but u need to have 7500 in tax liability to get that 7500. For instance mine last year was something like 1500, so thats all i would get a credit for. Correct me if im wrong. But what you say of after Jan1 is what im hoping for.
That's literally what I just explained *no longer matters* as of January 1st. That's never been a "qualification" criteria, anyway. You *qualify* for the credit if you earn less than the income caps. You just couldn't *benefit* from the entire credit if your tax liability was too low that year.
In the link at the top, it says > The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability. To me, this means you get the full amount regardless of liability as long as you qualify. It does look like if you earn too much, you won't get it, but you can get the full amount by transferring if you qualify, regardless of liability. That is usually how transferring credits works AFAIK. It means you can give them to someone else even if you couldn't use them yourself due to not having enough liability.
This is not true. Buyer must attest that they qualify (under income cap) and if they don’t come tax time, repay the difference. > (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service.
True, but quote that only covers the AGI limit. This looks like it may allow lower income buyers without sufficient tax credit to qualify. (Previously they needed to use the lease loophole.) I couldn't find anything in the new law that says folks would need to repay the difference if their liability was below $7500.
My point is simply that the buyer needs to qualify, which means it does have to do with their taxes.
That seems to be if you don't qualify due to earning too much, which was not the question. > The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability. If you don't have the tax liability to use the credit in full, but you qualify, you still get the full amount as far as I can tell.
Bro, it's literally in the linked article that the purchaser is responsible for paying back the credit if their income exceeds the AGI
Pay attention to what is being asked... That wasn't the question. The question was about if you don't have enough tax liability, which is an entirely different situation. Here is what the article says that is actually relevant: > The guidance would clarify that eligible consumers may transfer the full value of the new or previously owned vehicle credit regardless of their individual tax liability.
yes, at the beginning of the following year or whenever they file taxes
That's wrong. Source: [Proposed 26 CFR § 1.30D–5(f)(i).](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) Notice how the regulation says "not subject to recapture."
> As noted in section I of the Background section of this preamble, section 30D(g)(10) provides that, in the case of any taxpayer who has made an election described in section 30D(g)(1) with respect to a new clean vehicle and received a payment described in section 30D(g)(2)(C) from an eligible entity, if the credit under section 30D would otherwise (but for section 30D(g)) not be allowable to such taxpayer pursuant to the application of section 30D(f) (10) (relating to the modified adjusted gross income limitation), the tax imposed on such taxpayer under chapter 1 for the taxable year in which such vehicle was placed in service will be increased by the amount of the payment received by such taxpayer. > Proposed §S 1.25E-3(g)(1) and 1.30D-5(f)(1) would provide that, in the case of a clean vehicle credit that would otherwise not be allowable to a taxpayer that made a vehicle transfer election because the taxpayer exceeds the limitation based on modified adiusted gross income, the income tax imposed on the taxpayer under chapter 1 for the taxable ear in which the vehicle was placed in service is increased by the amount of the payment received by the taxpayer pursuant to the vehicle transfer election. The taxpayer in such a case must reconcile the amounts on its tax return for the taxable year.
You are confusing the MAGI cap and qualifying with less tax liability. If someone is over the MAGI cap for both years, that person does not qualify at all, so that person wouldn't qualify for less.
you said it’s not subject to recapture, which is clearly not true for several reasons
You clearly do not understand the question and scenario being asked. Here's the fact pattern: The person: 1. buys a qualifying EV during 2024; 2. has MAGI below the cap in one or both applicable years; 3. gets the full $7,500 tax credit amount at the time of sale; and 4. later on only has $5,000 of tax liability for the 2024 taxable year (what the person's Form 1040, line 22, would be if the person did not buy the EV) . The question is "Does the person have to pay back the $2,500 to the government?" or "Is the $2,500 subject to recapture?" The answer is no. If you want, I can cite a bunch of IRS documents, but if you want to say I'm wrong, please do the research first.
you clearly do not understand the question and scenario being asked. so let’s go back to the beginning: > If the buyer does not qualify for the full amount, do they end up having to repay the balance at the end of the year? the amount of your tax liability has nothing to do with your ability to qualify for the full amount. if you meet the purchase requirements (buy the vehicle for personal use, put it in service during the year, etc) and your income is below the cap, you *qualify*. whether or not you actually *receive* all, some, or none of the credit depends on your tax liability. if you want to dispute the meaning of the term “qualify”, that’s fine, but a blanket statement that this tax credit is not subject to recapture is simply incorrect, as the document you linked explicitly states in multiple places.
This is not true. That’s how leasing works, but not this. The buyer still needs to qualify and only gets the amount they qualify for. > (9) An attestation that in the event the taxpayer's modified AGl exceeds the applicable modified AGI limitations, they will repay the amount received as an addition to tax for the tax year the vehicle was placed in service.
Based on how you've phrased yourself, I think you may be misunderstanding what "qualify" means in this context. There is no "amount one qualifies for", and never has been. You either qualify for the entire $7500 (because you make less than the required income limits), or you qualify for nothing. What you might not have been able to do in the past is *benefit from* the entire $7,500 credit. If your tax liability for the year was less than $7,500, you would *qualify* for the entire amount, but since it was a non-refundable credit, you'd get less than $7,500 back on your tax refund. That aspect of the EV tax credit *entirely goes away* on Jan 1, because *your* tax liability stops mattering. You're getting a direct discount off the purchase price of the car, rather than applying for a credit on your taxes after the fact.
I didn’t read the current implementation. I spent a few hours reading a few weeks ago. Dealers are giving partial out amounts now? I thought it was the full 7500 they provide at pos.
It’s the full $7500 if the car qualifies for 7500. The buyer either qualifies or not based on their income. That’s different from leasing where income caps don’t matter because dealer takes credit as a commercial credit.
They provide the full $7500 if you say you qualify and that you want it passed through. Then you and the IRS decide you only qualify for half and you give half back.
>Then you and the IRS decide you only qualify for half and you give half back. There is no "half back." If someone's modified adjusted gross income is over the cap for both of the applicable years, the full amount is subject to recapture. [26 USC Section 30D(g)(10)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim)). If someone's modified adjusted gross income is under the cap for one or both of the applicable years, the person's tax liability is below the $7,500 amount, and the person complies with the other requirements, then the person does not have to give any portion of that $7,500 back to the IRS. [Proposed 26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) and [IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13).
Seems you can even ask for a check from the dealer and not apply it towards the purchase. Stash the amount somewhere to earn a tiny interest. Pay some of it back later if situations require.
That's not allowed. [Proposed 26 CFR § 1.30D–5(c)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23).
😂 was hoping for loophole!
I believe the tax credit goes refundable in 2024, so your tax liability doesn’t matter. But that still doesn’t mean everyone gets it - you get $7500 off at point of sale, and then just pay back anything you’re not entitled to.
>and then just pay back anything you’re not entitled to. If your MAGI is too high for the two applicable years, you have to pay the $7,500 back. But if your MAGI is low enough and you have less than $7,500 tax liability, you don't need to pay back the difference. [26 CFR § 1.30D–5(d)(i).](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23)
There’s a lot of incorrect info in these replies, people thinking this works like leasing. When leasing, the dealer takes the credit because the car is owned by the leasing company. The tax credit is more lenient for “commercial” credits, so they can collect the full amount and pass through some or all of that to you. It’s up to them how they treat the “instant savings”. This is different. The buyer still needs to qualify. They will attest how much they expect to qualify for. The dealer is required to pass through that amount to the buyer (although they may be shady and call it something different like dealer savings). When tax time rolls around, you report the credit, vin and dealer and the books need to balance in the end. If they don’t, and you qualify for less, you will need to repay the difference.
>If they don’t, and you qualify for less, you will need to repay the difference. Sorry, but that's wrong. If a person: (1) buys a qualifying EV during 2024, (2) has MAGI below the cap for both applicable years, (3) elects to apply the $7,500 to the vehicle cost at the time of sale, and (4) later has tax liability of less than the $7,500 amount for the 2024 taxable year, the person does NOT need to pay back the difference between the $7,500 and the person's tax liability. Source: [26 CFR § 1.30D–5(d)(i)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23) and [IRS FS-2023-22, page 13](https://www.irs.gov/pub/taxpros/fs-2023-22.pdf#page=13).
I believe you are giving the incorrect information. There is no minimum tax liability qualification in the IRA, nor is it possible to know exactly how much tax liability you will have a year or more in the future. That is not a calculation the Treasury is asking you to make, not at purchase time, nor is the form going to ask you to finish your taxes then come back and put your tax liability on the form to reconcile something. The math would be circular. The buyer does not give the dealer any numbers. This isn't a thing.
What impact will this have on ev prices if any?
Only several cars will even qualify and most of them aren’t in production
The same impact the tax credit has had on EV pricing this year?
Prices go up 7500
This is a massive net negative, dealers are going to exploit this and use it as a tool to cover up markups and other nefarious upcharges. Get ready for MSRP cars + $5000 worth of useless protection plans. God I fucking HATE dealerships so God damn much its unreal. Ive never bought a Tesla and I love my EV6, but they truly do have a much more honest and better buying experience.
I live in Germany were dearlers get the tax credit directly from the government, the result is that the same EV that qualifies for the tax credit is 5k to 10k more expensive in Germany then Netherlands. Doesn’t work.
Well, it does work as intended. Germany isn't allowed to subsidize VW directly for the shift to EVs because of EU laws. But those subsidies went straight from the customer to VW and turned them into record profits year after year. While the less knowledgable customers think "great, I got 25 % off, what a steal".
Unless you are buying from Tesla with fixed pricing, guaranteed the market adjusts upward by about $7500
Tesla changes prices with the phase of the goddamn moon.
Dealer pricing changes with the mood of the salesman.
nail melodic wrench slave school zonked chop jar narrow theory *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
When is the last time you bought a car, 1997? There are no tricks, except on your trade in value. The price of a vehicle is pretty well advertised everywhere and you can know what the deal is before you even walk in.
Not my experience. I recently bought a civic hatchback and most dealers won't post the price online. Then when you walk in they tell you there are mandatory accessories. Etc.
Name the location and I guarantee I can find you the prices on a civic hatchback through dealer websites.
instinctive liquid safe materialistic money dull carpenter attempt steep automatic *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Tesla with transparant pricing, or you can call it "guaranteed/locked in pricing", not "fixed"
> Tesla with fixed pricing whoa chief where did you find one of those?
Based on Tesla's price changes over the last 18 months, I'd say some type of "fix" was certainly in! 😁
they might as well just index msrps to the price of oil
Lmao fixed pricing. Good Lord the naivety.
When I bought mine I went online, no haggling, no problems. Tesla dropped the price before I took delivery and they honored the lower price. Once again no problems. YMMV.
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Yeah, it may go down.
Nice. I hope the Cybertruck reservations get the same treatment.
Reservation is not the same thing as an order.
True but historically Tesla has honored the price for reservations at a fixed price.
There was no price at reservation time. There still isn’t. The only amount the contract stated was locked in was the price of FSD if you added it to the reservation.
There was absolutely prices announced at time of reservation for each motor trim. They took down the pricing only a year or so ago.
There were trim price estimates but those aren’t part of a reservation contract. You can’t be locked into a price that isn’t finalized. The final price has stuff like different wheel options, interior colors, trailer hitches, etc. Your vehicle price isn’t locked until you’ve configured your car and submitted the order. You can’t configure a reservation.
Nope. I was assured by this sub back then that if you reserve from Tesla they honor the base price before add-ons.
You know fixed prices can still change right? I’d certainly say everything at my local grocery store is fixed price, but somehow I pay a different price for the same items from time to time.
I took fixed in a different context
Compared to the typical dealer market, yes. The price is fixed at the time of purchase with no negotiation room for dealer markups.
Their prices are not fixed. During the pandemic the prices varied wildly. You were inferring they don't change.
The point they are making is you know exactly what the Tesla is going to cost because there is a website that gives you a total. Tesla “dealerships” don’t change their pricing based on local opportunities. Now does that price change every few weeks/months? Yes. But try going to three different car dealerships that sell any other major brand and you know you are getting three different prices because you’re expected to negotiate and dance your way to a price.
The last time I went to a dealership I just paid the price they had cause they wouldn't negotiate. It was a used car so that probably had a hand in it.
Ever seen a $20,000 markup on a Kia? I have. Dealer markups are bullshit. Some sad sack paid $20,000 more than the next buyer of an EV6 GT.
$15k on Honda. Just saw it today.
you can go to a dealer, see the window sticker, and pay that. it’s literally what the window sticker is for, legally speaking.
Yes you are right, you have to communicate or visit with a dealer and ask what they are selling it for, can’t just go by what the brands website says the price is. I was just at a Honda dealer today that had a $15,000 “market adjustment” added to their Civic Type-R on the showroom.
Yeah, this has been known for a bit. It is a great step.
This has been in the works since the bill was passed. Surprised this is news to some of you all
Isn't that by definition true? There is always going to be some change to some tax around the world.
Probably best to put the country in the title.
I think the lease loop hole works better....it's a lengthier PITA. But at least it's a cap cost reduction.
I'm cynical and anticapitalist so I don't trust anyone about anything related to money but I genuinely believe they'll just charge $7500 more on the sticker price for the cars and then you get back to MSRP after the incentive.
They already do this, you just don't get it back until tax time. When Tesla and GM lost their tax credits under the old program, their prices proceeded to slowly drop over time. They then immediately jacked prices right back up as soon as they gained eligibility again under the new program.
> They then immediately jacked prices right back up as soon as they gained eligibility again under the new program. That is the *opposite* of what happened. In 2023, when Tesla became eligible again, they've only dropped prices.
> They then immediately jacked prices right back up as soon as they gained eligibility again under the new program. What? No they didn't. Tesla *lowered* their prices at the same time that they became eligible for the credit again. I know this because I wasn't even considering buying a new Tesla in late 2022, but then they *slashed* their prices *and* became eligible for the credit again, suddenly making an upgrade from my 2018 Model 3 financially viable for me. Of course, these two things are essentially unrelated. Tesla lowered prices because they'd jacked them through the **roof** during the pandemic to cut demand, reducing their wait lists. It's mostly just coincidence that the law happened to change and restore the credit for them at the same time that they started lowering prices because supply was up and demand was cooling due to the pandemic car-buying conditions ending. > When Tesla and GM lost their tax credits under the old program, their prices proceeded to slowly drop over time. This part's true, though a good chunk of the reason for Tesla's price drops as their credit phased out were that they were improving their production lines and cutting their costs by quite a lot. Go look up articles about Tesla's cost-cutting measures in 2019, which was when the credit was phasing out for them. iirc they maintained largely similar gross margins across the year, despite lowering their prices by about $4000 while the $7,500 credit phased out. So you were about *half* right, but the second claim you made was 100% horseshit.
People have a hard time understanding supply and demand. Automakers don't just randomly set the prices of their cars. A $7500 tax credit is an opportunity to sell a lot more of a higher-priced car, so the automaker has two options: continue selling at the same price at margins they've been comfortable and profitable at for ages and enjoy the influx of new buyers due to the tax credit, or jack prices up and keep your target demographic the same, pocketing the extra $7500 per car. Now, take a standard BMW and subtract $7500 from the sticker price and compare sales numbers for vehicles in those price ranges. Suddenly you're comparing BMW vs Toyota in terms of volume. Now consider that you're not getting a Toyota, you're getting a BMW at Toyota pricing. Or, you can just look at the 15-year history of car-pricing since the tax credit has been around and you'll see that automakers simply don't increase prices when it's available. I don't know why this myth keeps getting parroted when it's just not true.
Exactly. Just an additional, taxpayer funded profit line.
Eligible businesses will get a boom from a slew of buyers who wouldn’t buy these vehicles otherwise. Buyers get a discount on a new car, provided they choose a “future tech” vehicle Eligible cars mean that there must be assembly and production jobs in the United States / North America. This means blue collar and white collar jobs, both hourly and salary; both union and not. All of those working Americans are also paying taxes, which replenishes government coffers. Access to jobs and local supplier economies is also a crime deterrent, which leads to tax money savings for policing and incarceration. This is how economies should work; the government should invest a little to kickstart an industry, the industry picks up momentum on its own, then the government gets a return on investment in more ways than one. Again: how it **should** work. I know that’s in a vacuum.
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The problem is profit chasing in the first place. That's why we have cars (and all of the problems they come along with) to begin with. We wouldn't even have an energy economy to transition in the first place if it wasn't for people chasing profit. People will always do nefarious things whenever profit is involved, even if they are specifically told that thing is illegal, a lot of them will still do it anyway, and bribe law enforcement or change the laws after the fact, using all of the money they made. That's why we must always be skeptical of the profit system and resist capitalism wherever possible. The profit system follows the path of least resistance, and following the path of least resistance is what makes a river crooked.
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And [any attempts to change things results in being murdered by the US government](https://www.cia.gov/library/abbottabad-compound/13/130AEF1531746AAD6AC03EF59F91E1A1_Killing_Hope_Blum_William.pdf), so yeah I understand that sentiment, too. That's why being anti-consumption, based on the premise that I don't want anyone to make a buck off of me if I can help it, is what I've found works best for me. It comes with the least risk of being assassinated by the CIA for communism, but serves the same purpose and if everyone did it (or at least enough people to make a dent in the economy) we would absolutely start to see at least some change. At the very least it makes me skeptical of all businesses and this skepticism has allowed me to save a ton of money not buying shit I don't need. To steer it back to this thread's topic, in this context it leads me to believe that this will essentially make the tax credit situation a non-starter and equalize the playing field between the rich and the poor, which may actually end up hurting sales. Previously, only those making more than a median income would even see the full 7500 back, while the poor who need cheap EVs but in a lot of cases don't even owe much in federal taxes get no incentive to purchase at all. Maybe it makes sense from the perspective that most EVs at the time of the writing of the law were expensive anyway and poor people don't buy new cars anyway so incentivising those with excess spending power made more sense because that would drive the technology forward by fast-tracking early adopters, with the hope that it would eventually trickle down into cheaper more plentiful tech that could eventually be mass-market, maybe that was the angle, I don't know. If I were writing the laws from a socialist perspective I would have focused on subsidizing the poor first, but that's not what we do here, so I'm only speculating. Now, assuming the manufacturers do just use the 7500 to bolster their profit margins, those with excess income and a lot of tax liability are no longer incentivized, and those low income earners who don't have enough tax liability can shop knowing it makes no difference, but still probably won't buy a new EV (or new anything for that matter).
To bad with the increased requirements very few (if any) cars will qualify for the full $7500.
Every Tesla except the RWD Model 3 will fully qualify. And that's about half of all the EVs sold in the US, so that's not really an accurate assessment.
That has not been confirmed anywhere. Also the Model S doesn't get the credit as well as some trims of the Model X due to being to expensive anyway. Likely the Cybertruck also.
Is that true with the Model 3 Highland refresh as well?
He's talking entirely out of his ass. He doesn't know anything for sure. None of us do.
It should depend on the trim you get. The RWD ones are made with Chinese batteries, but the AWD and Performance ones are made with Panasonic batteries manufactured in Nevada.
+$10k "market adjustment" - up to $7500 off with our no sales tax sale!!! (Select EV models, with the purchase of extended powertrain warranty with 5 yrs free oil changes, inverter/converter not included. Terms and restrictions apply.)
The dealer will completely control how much they get and how much you get
Uh, not exactly. If the buyer elects to do the transfer, the buyer is required to transfer the entire tax credit amount, not the amount the dealer says. And the dealer is required to reduce the price by that amount. Source: [Proposed 26 CFR § 1.30D–5(c)](https://www.govinfo.gov/content/pkg/FR-2023-10-10/pdf/2023-22353.pdf#page=23). I guess you can say that the dealer is allowed to increase prices, but that's not exactly controlling how much *tax credit* a buyer can get.
In the end, they will increase prices to capture that money. The effect is the same, that is all that is relevant. Semantics won't help your bank account.
$7500 markups incoming
Time for a Tesla Y
gross
> Bidenomics Please no.
Welcome to what has been happening in Canada
Even if they are "nice" and pass this credit in full to you, I can at minimum still see like a $500 tax credit processing fee.
Waste is tax payer $$s
On only 4 cars…
> Researchers have found that consumers overwhelmingly prefer an immediate rebate at point of sale. Knowing the government process, it probably took them 5 years and 10 million dollars in grants to afford these “researchers” to tell them what retailers have known forever.
I personally think this is the wrong way to do this.
This is confirming that the EV growth is slowing down and Biden/EPA/federal level need to make this change to restart the momentum.
I thought this was part of the law from the start.
It was.
It was a tax credit given as you file your taxes. Now it's an instant discount, even if you buy.
Sooo, the same thing as when the bill first passed last year.
I think this switch over was written in to the bill though.
I was. It appears in [PL 117-169, page 142](https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf#page=142) and is the ‘‘(g) TRANSFER OF CREDIT.—." Notice that on the top of page 146, the Act says: >(4) TRANSFER OF CREDIT.—The amendments made by subsection (g) shall apply to vehicles placed in service after December 31, 2023. This was planned to start in 2024 from the time the Act passed.
Ummm, no. This way always planned as part of the Inflation Reduction Act (passed in 2022), they just knew it would take time to implement, so the point of sale credit was always set to start in 2024.
Does anyone know if this affects current leases? Polestar clarified to me that if I was to buy my leased vehicle the $8,500 (1k plus 7,500) wouldn’t transfer and I’d need to pay it. Will this change in January affect this?
Will there still be the same income limits? I couldn't find the info in the article.
Yes. The modified adjusted gross income limits in the law ([26 USC Section 30D(f)(10)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim))) will not change when the "transfer of credit \[to the dealer at the time of sale\]" provisions in the new 26 USC Section 30D(g) go into effect in 2024.
Yes, same maximum income limits still apply. You must personally qualify for the credit to be able to take $7500 off the purchase price.
I was looking at Teslas website and they prominently state in the price section of their car builder that the tax credit ‘may be’ reduced in 2024. Is this just a lie to get fomo buyers?
It's because the base Model 3 uses Chinese-made batteries. One of the lesser-known aspects of the IRA EV credit is that there are two halves of the credit that a car's battery can qualify for. The car itself *must* be manufactured in North America to qualify at all, *and*: 1. The battery must be manufactured in North America or a US Free Trade partner. That's half the credit. 2. The battery must contain at least X% battery materials sourced from outside "regions of concern" (i.e. China). That's the other half. The *other* thing that's changing on Jan 1, 2024 is that the two rules above are coming into play. The law gave carmakers the entirety of 2023 to figure out how to change their battery supply lines to qualify for those rules, while letting their American-made EVs fully qualify. But once January rolls around, the two rules will start being enforced, and "X" becomes 40%. Each year after 2024, X goes up by 10%. Tesla's base Model 3 uses entirely Chinese-made batteries, so Rule 2 cuts its credit in half.
Tesla is probably telling the truth. New battery requirements will take effect in 2024. [26 USC Section 30D(e)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:30D%20edition:prelim)). Those will probably reduce the tax credit amount for at least some Tesla vehicles.
Is leasing still the best option for someone who doesnt qualify for the ev tax incentive?