The Inflation Reduction Act introduces a number of significant changes to the tax credit for new electric vehicles. These changes will phase in over time. Effective immediately (after August 16, 2022), the tax credit is only available for qualifying electric vehicles (EV) for which final assembly occurred in North America. Further changes to the eligibility rules will begin in 2023.

Consumers can follow a simple two-step process to check whether a vehicle’s final assembly occurred in North America.

  1. Check here to see the list of 2022 and 2023 electric vehicles that likely meet the North America final assembly requirement.*
  2. To confirm whether a specific vehicle’s final assembly occurred in North America, consumers should enter the 17-character Vehicle Identification Number (VIN) into the National Highway Traffic Safety Administration’s VIN Decoder tool and refer to the “Plant Information” field at the bottom of the page result.

*Consumers can check this list to determine whether a make/model is potentially eligible for the credit in light of the final assembly requirement. Because some models are built in multiple locations, there may be vehicles on this list that do not meet the final assembly requirement in all circumstances. 

Generally speaking, the reforms in the Inflation Reduction Act mean that the tax credit for electric vehicles will evolve considerably over the coming months and years. However, the only change to the electric vehicle
credit that takes effect immediately after the President signed the Inflation Reduction Act into law is the North America final assembly requirement.

If you entered into a written binding contract to purchase a qualifying electric vehicle prior to August 16, 2022, the changes in the Inflation Reduction Act will not impact your tax credit. You may claim the credit based on the rules that were in effect before August 16, 2022.

Separately, starting in 2023, the Inflation Reduction Act also establishes tax credits for pre-owned clean vehicles and for commercial clean vehicles. More information on all the clean vehicle credits will be released in the coming months.

More details about the Inflation Reduction Act and its impacts on EV tax credits can be found here.

Source:  US Treasury