Anyone Else Place Last-Minute EV Orders to Lock In $7,500 Tax Credit?

[Z-one]

I purchased my MME in March 2022. I planned on taxing advantage of the $7500 federal tax credit. The new legislation places an income cap which makes me ineligible. Does anyone know if those who purchased before this new law will be grandfathered? Thanks

As long as you took delivery already you are fine the law is not retroactive.

Besides maybe issues with the bill the income cap is fairly low given some of the largest adopters of EV are the most expensive states and 300k joint is not that much.

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[generaltso]

I purchased my MME in March 2022. I planned on taxing advantage of the $7500 federal tax credit. The new legislation places an income cap which makes me ineligible. Does anyone know if those who purchased before this new law will be grandfathered? Thanks

If you already took delivery of the car, you're fine.

 

[Phil-Springs]

If you already took delivery of the car, you're fine.

And if you take delivery between now and the end of the year, are we still under the old rules. Most of this only applies after 1 January?

 

[generaltso]

And if you take delivery between now and the end of the year, are we still under the old rules. Most of this only applies after 1 January?

Correct. The only big provision that takes effect immediately is the final assembly requirement. But that's doesn't affect the MME since it's made in North America.

 

[Phil-Springs]

Correct. The only big provision that takes effect immediately is the final assembly requirement. But that's doesn't affect the MME since it's made in North America.

Thanks!

 

[ridgebackpilot]

Glad you are coming around to the idea that as currently set up, you'll have to take the credit/credits in TY 2022! I should have had more faith in you.

I’m happy to bet you that the IRS will eventually amend Form 8936 to allow us to claim the current tax credit next year or whenever the vehicle is purchased and delivered. Provided, of course, that we have "written binding contracts for purchase" in hand before President Biden signs the bill this week...

It’s really the only sensible way to comply with the spirit of the new law. To require taxpayers to amend their previous returns just to claim a tax credit creates too much work for everyone, including the IRS!

 

[AEGinMD]

Here’s an exhaustive list of all EV and hybrid vehicles that will qualify under the new bill passed yesterday. It does show that the Mustang Mach E qualifies under certain restrictions so I am guest that the Mexico plant isn’t a disqualifier or they consider all of North America to meet the where manufactured qualification.

https://www.consumerreports.org/car...utm_medium=newsletter&utm_source=morning_brew

From what I've read, the new legislation ties the tax credit to production in North America, so Mexico counts!

 

[Regulus7]

Biden is signing IRA tomorrow. 8/16. So that means you had to have had a signed and binding agreement dated by 8/14. So game over. Now we will see how the IRS will implement the 'binding contract' language... ?

 

[generaltso]

From what I've read, the new legislation ties the tax credit to production in North America, so Mexico counts!

For the Final Assembly requirement, yes. But there are also battery component and mineral source requirements, and we don't know yet how those will affect the MME.

 

[s7davis]

If you haven't place a firm order or purchase agreement yet you need to do so before 3pm EST that is when you will lose the 7500 credit.

Once he signs it will take away the 7500 credit on any vehicle sold after the signing of the bill. It will not matter if it is sold tomorrow or not if you do not have a purchase agreement you need to get one ASAP. This means their is until 12.31.22 to buy the vehicle for tax credit.

 

[kennethjk]

If you haven't place a firm order or purchase agreement yet you need to do so before 3pm EST that is when you will lose the 7500 credit.

Once he signs it will take away the 7500 credit on any vehicle sold after the signing of the bill. It will not matter if it is sold tomorrow or not if you do not have a purchase agreement you need to get one ASAP. This means their is until 12.31.22 to buy the vehicle for tax credit.

You quote above applies to only subsection (b) And its effective date is after date of enactment, Doesn’t (b) just apply to final assembly, which must be in North America.

if that is the case wouldn’t the MME still get the credit this year. I still haven’t read the entire bill since I only have an I phone with me and it too tedious to refer back to all code sections etc.

 

[ridgebackpilot]

If you haven't place a firm order or purchase agreement yet you need to do so before 3pm EST that is when you will lose the 7500 credit.

Once he signs it will take away the 7500 credit on any vehicle sold after the signing of the bill. It will not matter if it is sold tomorrow or not if you do not have a purchase agreement you need to get one ASAP. This means their is until 12.31.22 to buy the vehicle for tax credit.

Sorry, but you're misinterpreting and overstating the effect of the new law. MMEs are assembled in Mexico, which is part of North America, so unaffected by the bill.

Anyone taking delivery of a MME before the end of the year should get the $7,500 tax credit. After that, it will depend on several factors, such as your income and the battery mineral origin requirements of the statute.

Under the transition provisions of the new law, anyone having signed a written binding contract to purchase an MME prior to the date of enactment (today) should also get the tax credit under the old rules, even if your car isn't delivered until next year. But we'll have to wait for IRS regulations to determine how we'll be able to claim that credit.

 

[s7davis]

I get that but I think which I'll read the bill more today the battery mi reals will start after signing as well. But I will read up on it more.

I do know of you already have a written binding agreement you are fine.

 

[kennethjk]

This may help some of you. It’s from KPMGs website, although it is info from the senate bill before the house passed it

The Senate bill would bifurcate the $7,500 credit into two components:
• $3,750 if critical minerals requirements are satisfied; plus
• $3,750 if battery component requirements are satisfied.
The critical minerals requirements provide that the applicable critical minerals in a battery must be (1) extracted in the United States or a country with which the United States has a free trade agreement in effect, or (2) recycled in North America. The value of “good” minerals must be equal or greater to an applicable percentage. The applicable percentages for the critical minerals requirement are as follows:
• 2023—40%
• 2024—50%
• 2025—60%
• 2026—70%
• 2027 and later—80%
This provision would go into effect as soon as the IRS issues guidance on the requirement which the statute states is to be no later than December 31, 2022.
The battery component requirements provide that the percentage of the value of the components contained in such battery that were manufactured or assembled in North America must be equal to or greater than the applicable percentage. The applicable percentages for the battery component requirement are as follows:
• 2023—50%
• 2024-2025—60%
• 2026—70%
• 2027—80%
• 2028—90%
• 2029 and later—100%
This provision would also go into effect as soon as the IRS issues guidance on the requirement which the statute states is to be no later than December 31, 2022.

 

[ridgebackpilot]

This may help some of you. It’s from KPMGs website, although it is info from the senate bill before the house passed it

The Senate bill would bifurcate the $7,500 credit into two components:
• $3,750 if critical minerals requirements are satisfied; plus
• $3,750 if battery component requirements are satisfied.
The critical minerals requirements provide that the applicable critical minerals in a battery must be (1) extracted in the United States or a country with which the United States has a free trade agreement in effect, or (2) recycled in North America. The value of “good” minerals must be equal or greater to an applicable percentage. The applicable percentages for the critical minerals requirement are as follows:
• 2023—40%
• 2024—50%
• 2025—60%
• 2026—70%
• 2027 and later—80%
This provision would go into effect as soon as the IRS issues guidance on the requirement which the statute states is to be no later than December 31, 2022.
The battery component requirements provide that the percentage of the value of the components contained in such battery that were manufactured or assembled in North America must be equal to or greater than the applicable percentage. The applicable percentages for the battery component requirement are as follows:
• 2023—50%
• 2024-2025—60%
• 2026—70%
• 2027—80%
• 2028—90%
• 2029 and later—100%
This provision would also go into effect as soon as the IRS issues guidance on the requirement which the statute states is to be no later than December 31, 2022.

The intent of the original tax credit was to promote early adoption of EVs.

Sure seems like the intent of the new tax credit has shifted to promoting EVs made in America...

I'm all for "on-shoring" manufacturing but qualifying for the new tax credits seems uncertain at best, even if you're not eliminated by the income caps...

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