Startup electric vehicle maker Rivian recently reached out to its customers via email to fill them in on the Internal Revenue Service’s guidance related to the Inflation Reduction Act's newly revamped US federal EV tax credit. However, the information explains how to take advantage of the original credit rather than the new one.
Some people have voiced concerns that they ordered an EV in the US before the new EV tax credit was made official. There have been questions about whether they can still get the "old" credit they were hoping for, or if exceptions may be made for them to somehow benefit from the revamped credit even if the rules are stacked against them.
Based on the rules for the revamped US EV tax credit, electric cars must be put into service after December 31, 2022, and before January 1, 2033. They also must have their final assembly take place in North America.
Fortunately, the IRS has now released guidance on precisely how US taxpayers may be able to get the old federal EV tax credit. The guidance applies to folks with "valid written binding contracts signed on or before August 15, 2022."
If you have such a contract, you can claim the original EV tax credit, and there won't be any restrictions on the MSRP or the buyer's income. Moreover, there won't be rules pertaining to materials sourcing and manufacturing requirements.
The information about the IRS' new guidance was published by Teslarati after being outlined in great detail by the law firm, Foley & Lardner LLP. The firm notes that claiming the original EV tax credit requires the use of Form 8396.
Language and rules related to such credits can be very confusing, and sometimes even misleading. Not all people will be able to take advantage of the EV tax credit, regardless of whether they're aiming to get the original credit or the new one.
With that said, it's imperative that EV shoppers do their homework and consult with a tax professional before closing a deal on an electric car. The new credit also has a section that applies to used EVs, which wasn't the case in the past. However, again, the details may not seem crystal clear, so make sure you know exactly how it's going to work out in your favor before signing the bottom line and taking delivery.