Federal program aims to make electric vehicles more affordable

Electric vehicles are typically seen as expensive cars to own. But an updated, federal tax program designed to make them more affordable could credit you up to $7,500 for purchasing a new clean vehicle.

Throughout January, the government has been ironing out details of its new EV tax credit program, just as many Americans head into tax season. Some of the new changes, enacted by the passage of the Inflation Reduction Act, broaden the scope for eligibility, making more buyers and lessors qualify for some amount of tax credit.

For instance, starting in 2023, people who purchased used vehicles also qualify for a smaller credit amount.

Due to the program’s evolving requirements, understanding if your car qualifies for credit under the program — and how much money you can receive — can get complicated.

When President Joe Biden passed the IRA bill in August 2022, he did more than just target rising inflation; he also signed off on various programs to encourage Americans’ sustainable living choices and lower their energy costs, including for electric vehicle owners, according to the White House.

The new federal EV credit program also strives to make clean cars more affordable for the average consumer, said Keith Barry, automotive writer at Consumer Reports.

“It seems that the way that the tax credits are designed, they are aiming to stimulate sales of vehicles made in North America, and also stimulate sales of affordable EVs,” Barry said.

The bill notably required that all vehicles must “undergo final assembly” in North America. It also removed the 200,000 vehicle cap for manufacturers, which previously made some ineligible for credit, making some Tesla, General Motor and Toyota models qualify for a tax reduction.