New rules surrounding federal tax credits and the Inflation Reduction Act go into effect on Tuesday, April 18, drastically changing which models qualify to get buyers credits and which don't.
The Inflation Reduction Act puts an emphasis on American manufacturing and materials sourcing. The rules of the Act were announced last month.
"The Inflation Reduction Act is a once-in-a-generation piece of legislation that is lowering costs for American consumers, building a strong U.S. industrial base, and bolstering supply chains," Secretary of the Treasury Janet L. Yellen said in a statement last month.
Rules dictate that the price of a van, pickup truck or SUV must be $80,000 or less to qualify for the incentive. Other vehicles must be priced below $55,000.
All electric vehicles produced by General Motors today qualify for the maximum credit of $7,500. Some Ford, Jeep, Lincoln and Tesla models only qualify for half that amount.
Luxury and premium brands are especially hard hit by the changes. Audi, BMW, Genesis, Rivian, Volkswagen, and Volvo all lose their federal incentives as part of the new rules. Kia, Nissan and Hyundai models also no longer qualify.
"The tax credit eligibility changes on certain vehicles will most likely confuse consumers further in the short term," Tony Salerno, vice president at J.D. Power, told Newsweek.
"Each brand will have to work even harder to educate consumers on not only the up-front cost of each vehicle, but the total cost of ownership difference to alternatives. That's much more calculus than consumers are accustomed to – or may want to work though. A consumer not doing their homework is like jumping into a pool without knowing the depth of the water."
For 2023, the following vehicles are eligible for the full $7,500 credit under 2023 manufacturer's suggested retail price (MSRP) rules:
- Cadillac Lyriq
- Chevrolet Bolt EV
- Chevrolet Bolt EUV
- Chevrolet Equinox EV SUV
- Chevrolet Blazer EV SUV
- Chevrolet Silverado EV
- Chrysler Pacifica PHEV
- Ford F-150 Lightning
- Lincoln Aviator Grand Touring
- Tesla Model 3 Performance
- Tesla Model Y (certain variants only)
- Volkswagen ID.4
Additionally, BrightDrop and Chevrolet Silverado EV fleet customers can benefit from the $7,500 commercial incentive.
Those that qualify for the $3,740 tax credit include:
- Ford Escape Plug-in Hybrid
- Ford E-Transit
- Ford Mustang Mach-E
- Jeep Grand Cherokee PHEV 4xe
- Jeep Wrangler PHEV 4xe
- Lincoln Corsair Grand Touring
- Rivian R1T
- Rivian R1S
- Tesla Model 3 Standard Range Rear Wheel Drive
Today, FuelEconomy.gov is expected to offer a list of eligible vehicles that have been indicated by their manufacturers to the Internal Revenue Service that they meet the requirements to claim new vehicle credits, including the amount buyers to can expect to be eligible to receive.
This article has been updated to include the models that have had tax credit eligibility finalized after initial publication.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Eileen Falkenberg-Hull leads the Autos team at Newsweek. She has written extensively about the auto industry for U.S. News & ... Read more
