Here’s how the IRS‘s clean vehicle tax credit will change on April 18

Increasing percentages of battery components and critical minerals must be local.

See full article...

 

[Frodo Douchebaggins]

As far as I'm concerned, Manchin owes me $7,500 for yanking the rug out from under people and changing the tax credit mid-year last year. Alas, I'll just have to get an equivalent amount of satisfaction from pissing on his grave some day.

Christ, what an asshole.

 

[krimhorn]

"The number of vehicles eligible for even a partial tax credit has been significantly reduced, slowing adoption of electric vehicles, under the new rules."

Working as designed.

 

[ColdWetDog]

I am happy to see that yet another aspect of the US economy will be shackled with confusing, contradicting, calendar tethered and often self defeating regulation. Healthcare was the poster child for this activity.

Welcome to hell, folks.

 

[ColdWetDog]

I am happy to see that yet another aspect of the US economy will be shackled with confusing, contradicting, calendar tethered and often self defeating regulation. Previous to now, Healthcare was the poster child for this activity.

Welcome to hell, folks.

And the Edit / Reply button colocation UX issue strikes again. Hey designers, some of us are way past our expiration date. Give us a break.

 

[Fatesrider]

That's going to come as an interesting calculus benefit for the large minority of American households that pay taxes in the first place.

57% of Americans don't pay federal taxes. So tax rebates are considerably less useful as a purchase incentive than tax-free subsidies to potential buyers would be.

Tax incentives for those who can generally afford new or good used cars isn't how to go green in time to do shit about climate change.

 

[Umcharliex]

This will insure people stick with gas cars a little longer. I am sure Manchin and other members of congress and senate will be pleased and won't profit off this decision in one way or another.

 

[Frodo Douchebaggins]

57% of Americans don't pay federal taxes.

Holy shit. I had no idea.

 

[EvolutionaryBiochemist]

I bought a 2019 Kona EV that qualified for the original, simple, $7500. It took three exchanges with the IRS, over a year, and eventually me paying a tax lawyer to write a nasty letter to get the IRS to recognize the credit. And now there are pages of rules for them to quibble over?

 

[Eurynom0s]

That's going to come as an interesting calculus benefit for the large minority of American households that pay taxes in the first place.

57% of Americans don't pay federal taxes. So tax rebates are considerably less useful as a purchase incentive than tax-free subsidies to potential buyers would be.

Tax incentives for those who can generally afford new or good used cars isn't how to go green in time to do shit about climate change.

If you don't have enough income to qualify for the credit, you can lease the car. The car company takes the credit and rolls it into the lease payment. Or at least, this was true pre-pandemic, not sure if the companies would just pocket the credit now with the continued car shortages.

Of course, that 57% probably isn't the group currently buying electric cars either way, or for that matter new cars in general.

 

[TroubleMan]

If you don't have enough income to qualify for the credit, you can lease the car. The car company takes the credit and rolls it into the lease payment. Or at least, this was true pre-pandemic, not sure if the companies would just pocket the credit now with the continued car shortages.

Of course, that 57% probably isn't the group currently buying electric cars either way, or for that matter new cars in general.

This is what all the people at leasehackr forums are doing for EVs. The lease is better than buying often because of this.

 

[Eurynom0s]

This is what all the people at leasehackr forums are doing for EVs. The lease is better than buying often because of this.

Yup, key thing IIRC is that if you buy and take the credit yourself you get stuck paying taxes on the full amount, vs if the car company takes the credit then your taxable amount is lowered accordingly. Both on the down and monthly payments, and then it counts against the residual at the back end if you decide to buy out the car at the end.

 

[Snark218]

This is not a wildly popular opinion, but the transition to EVs will be hard enough without tying one hand behind our backs with Buy America provisions. I get that it's a feel-good measure, I get that people want to reverse 30 years of offshoring, I get that it was necessary to achieve buy-in, but it's going to make the transition slower, more expensive, and harder, it's going to restrict which already scarce EVs are eligible for the credit, and it's mostly based on good optics rather than good policy.

 

[Eupfhoria]

I'm all for using federal government stimulus to incentivize consumption in the manner we want, but EVs are good now, and people want them. Perhaps we could re-allocate this massive amount of funds towards other things that aren't as cool, but could use significant help? Hybrid water heaters? Sub-floor heating and/or training for sub-floor heating contractors? ebikes and/or ebike repair training? Some of the programs that have been proven reduce vehicle miles travelled?

 

[cyberfunk]

This is what all the people at leasehackr forums are doing for EVs. The lease is better than buying often because of this.

Definitely leased to get the corporate-fleet discount on my EV that I started driving in Jan. this year.

 

[Dr Gitlin]

Holy shit. I had no idea.

That seems to be a statistic that has been very warped by covid. From the article's abstract:

"More than half of American households paid no federal income tax last year due to Covid-relief funds, tax credits and stimulus, according to a new report."

"Since most workers pay payroll taxes, the share of Americans who pay neither payroll nor federal income taxes was only 19% in 2021, slightly higher than the 17% rate before the crisis."

And if you don't have enough tax liability that you've paid less than $7,500 in federal tax during a year, you're unlikely to be spending $70,000 on a new electric crossover.

 

[Drum]

That's going to come as an interesting calculus benefit for the large minority of American households that pay taxes in the first place.

57% of Americans don't pay federal taxes. So tax rebates are considerably less useful as a purchase incentive than tax-free subsidies to potential buyers would be.

Tax incentives for those who can generally afford new or good used cars isn't how to go green in time to do shit about climate change.

Should people making less income yearly than the cost of the vehicle in question really be considering a new $45,000 ioniq 5 or model 3?

I don't exactly mean this in a "poors should stay poor" way - giving people a way to "reason" that a $7500 rebate makes a now $38,000 vehicle affordable on a $50,000 salary sounds like a great predatory way to saddle consumers with more seven or eight year loans where they'll end up paying twice as much in interest.

Now - on the other hand - the used ev credit should definitely be a rebate rather than a tax credit. Spending 12k instead of 16k and getting a rebate on said purchase instead of not getting a tax credit because you owe barely and taxes would be a great improvement. That should definitely happen. But I've seen friends already go way outside their means to buy ICE vehicles that they can't afford, and I wouldn't want anything to contribute to the logic that people use to buy things outside their means.

I don't think the solution is to make new $45,000 EVs slightly less prohibitively expensive for the people who can't afford them - we just need more competition in the Chevy Bolt space, and more EVs in that $30,000 new space selling for $20,000 used. Unfortunately, that's going to be a tough sell until EVs start really hitting higher volumes.

I'm curious how these new rules will change the market. Section 45 (the loophole which provides a $7500 leasing rebate leading to a lease buyout to purchase the vehicle) is explicitly not affected by battery sourcing and even assembly requirements. I wonder if we'll see leasing go up across the board as it has for places like Hyundai already, or if we'll see a reduction in the leasing rebate since new vehicle purchases will only qualify for half the credit. (In reality, manufacturers will still pocket $7500 on leases, it just might be harder for consumers to get the full credit passed through).

 

[jock2nerd]

Holy shit. I had no idea.

Misleading statistic.

 

[Dr Gitlin]

Should people making less income yearly than the cost of the vehicle in question really be considering a new $45,000 ioniq 5 or model 3?

I don't exactly mean this in a "poors should stay poor" way - giving people a way to "reason" that a $7500 rebate makes a now $38,000 vehicle affordable on a $50,000 salary sounds like a great predatory way to saddle consumers with more seven or eight year loans where they'll end up paying twice as much in interest.

Now - on the other hand - the used ev credit should definitely be a rebate rather than a tax credit. Spending 12k instead of 16k and getting a rebate on said purchase instead of not getting a tax credit because you owe barely and taxes would be a great improvement. That should definitely happen. But I've seen friends already go way outside their means to buy ICE vehicles that they can't afford, and I wouldn't want anything to contribute to the logic that people use to buy things outside their means.

I don't think the solution is to make new $45,000 EVs slightly less prohibitively expensive for the people who can't afford them - we just need more competition in the Chevy Bolt space, and more EVs in that $30,000 new space selling for $20,000 used. Unfortunately, that's going to be a tough sell until EVs start really hitting higher volumes.

I'm curious how these new rules will change the market. Section 45 (the loophole which provides a $7500 leasing rebate leading to a lease buyout to purchase the vehicle) is explicitly not affected by battery sourcing and even assembly requirements. I wonder if we'll see leasing go up across the board as it has for places like Hyundai already, or if we'll see a reduction in the leasing rebate since new vehicle purchases will only qualify for half the credit. (In reality, manufacturers will still pocket $7500 on leases, it just might be harder for consumers to get the full credit passed through).

Plus, there is now a tax credit for purchasing a used EV that lower income buyers can obtain.

 

[cyberfunk]

This is not a wildly popular opinion, but the transition to EVs will be hard enough without tying one hand behind our backs with Buy America provisions. I get that it's a feel-good measure, I get that people want to reverse 30 years of offshoring, I get that it was necessary to achieve buy-in, but it's going to make the transition slower, more expensive, and harder, it's going to restrict which already scarce EVs are eligible for the credit, and it's mostly based on good optics rather than good policy.

I kind of agree with this, but on the other hand, I really see the point that US Tax dollar based incentives ought to go toward the US economy and not Korean/German economies, but particularly not to China's. Its designed to incentivize US manufacturing capabilities and there's significant secondary benefits from being self sufficient and not beholden to hostile parties.

If you want a hard lesson about this, ask Germany about their Russian gas problem and how much pain it's causing. They bent over backwards to avoid angering Russia (re: Ukraine) until it became basically impossible to be neutral in the conflict, mostly because of the energy chokehold Russia had.

Yes, I realize there's historical cultural reasons that the Germans also wanted to stay out of it, but it's impossible to say the energy sector consideration wasn't a major point of leverage.

 

[Snark218]

If EV's are "that good" let them compete on an even playing field.
Tax credits are just politicians way of buying more votes!

If gasoline is that good, let it compete on an even playing field too - with no accounting shenanigans, no cheap extraction leases, no regulatory carve-outs, and a carbon tax fully accounting for the social cost of every ton of carbon emitted.

EVs improve urban air quality, noise, and reduce carbon emissions. There is a value to that. Partially reimbursing owners willing to shell out their own money on a car that realizes quantifiable value for all of us is good and fair. We need more people driving EVs, not less, and the more EVs are on the road, the more the public health and environmental benefits accrue.

Stop suggesting stupid, petty policy.

 

[Drum]

Yup, key thing IIRC is that if you buy and take the credit yourself you get stuck paying taxes on the full amount, vs if the car company takes the credit then your taxable amount is lowered accordingly. Both on the down and monthly payments, and then it counts against the residual at the back end if you decide to buy out the car at the end.

I did this recently with an ioniq 5. The key thing at least in my case is that I did a lease buyout immediately after my first monthly payment. The $7500 came off the cost of the car, but, at least the Hyundai dealers I visited, had the MF at a pretty enormous rate, with the ending residual basically recouping the $7500 rebate for Hyundai.

I tallied up my money spent after getting the title signoff from Hyundai, and it was just about a $6500 discount in total after accounting for fees like the leasing origination fee and the buyout fee. Still a heck of a lot better than $0 through a purchase though.

(for reference, the purchase was for an SEL AWD Ioniq 5. The end cost was in the vicinity of $43.5k before government fees and the like).

 

[NetMage]

if he was able to

Should that be unable?

one that runs too many pages

Typo or deliberate? It reads well either way…

 

[Frodo Douchebaggins]

That seems to be a statistic that has been very warped by covid. From the article's abstract:

"More than half of American households paid no federal income tax last year due to Covid-relief funds, tax credits and stimulus, according to a new report."

"Since most workers pay payroll taxes, the share of Americans who pay neither payroll nor federal income taxes was only 19% in 2021, slightly higher than the 17% rate before the crisis."

Ahhhhhh that makes more sense.

And if you don't have enough tax liability that you've paid less than $7,500 in federal tax during a year, you're unlikely to be spending $70,000 on a new electric crossover.

Yeah it's been my impression that really the broader effect of this is that it'll help convince people already buying new cars to buy EVs or maybe upgrade their existing EV more frequently, and then over time it'll increase the supply of used EVs in the market

 

[Drum]

Plus, there is now a tax credit for purchasing a used EV that lower income buyers can obtain.

Yeah - that's what I was mentioning in my second paragraph. I definitely agree that the law should have been structured in such a way as to make the used EV credit apply no matter what. I guess the easiest way to do that would have been to have a refundable tax credit rather than a normal one.

 

[Snark218]

I kind of agree with this, but on the other hand, I really see the point that US Tax dollar based incentives ought to go toward the US economy and not China/Korea/Germany/etc's economies. Its designed to incentivize US manufacturing capabilities and there's significant secondary benefits from being self sufficient and not beholden to hostile parties.

If you want a hard lesson about this, ask Germany about their Russian gas problem and how much pain it's causing. They bent over backwards to avoid angering Russia until it became basically impossible to be neutral because of the energy chokehold Russia had.

This isn't a point without merit, and I see where you're coming from - but mitigating climate change is also an all hands on deck situation. If China, Korea, and Germany are meeting demand for these technologies, then I don't ultimately have a problem with people buying their products. And the tax credit is a direct benefit to the buyer, not the manufacturer.

 

[kltye]

That's going to come as an interesting calculus benefit for the large minority of American households that pay taxes in the first place.

57% of Americans don't pay federal taxes. So tax rebates are considerably less useful as a purchase incentive than tax-free subsidies to potential buyers would be.

Tax incentives for those who can generally afford new or good used cars isn't how to go green in time to do shit about climate change.

I understand that "poor people" aren't buying EVs; however, the $7500 rebate for my EV definitely helped push me to sell both my 2.0 4-cyl turbo and a PHEV to get the EV. I'm not saying I'm a saint or doing people favours because of this, but I'm hoping it helped two people buy more fuel-efficient vehicles more affordably.

Also, I'm not exactly rich. I live comfortably, but I certainly can't afford anything close to an $80,000 SUV.

 

[Frodo Douchebaggins]

EVs improve … noise

Well, they did, but now with these obnoxious pedestrian noisemakers that cause EVs to be louder than modern ICEs at low speeds, I fear that once EVs become the norm we are going to find that lots of EVs traveling at low speeds are awful

 

[t_newt]

That's going to come as an interesting calculus benefit for the large minority of American households that pay taxes in the first place.

57% of Americans don't pay federal taxes. So tax rebates are considerably less useful as a purchase incentive than tax-free subsidies to potential buyers would be.

Tax incentives for those who can generally afford new or good used cars isn't how to go green in time to do shit about climate change.

The bill has it covered.

Starting in 2024, the car seller can take the tax credit themselves and pass the savings onto the customer (and no, they can't jack the car price up before doing this). So you'll be able to get the $7500 credit even if you pay no taxes at all.

 

[kltye]

Well, they did, but now with these obnoxious pedestrian noisemakers that cause EVs to be louder than modern ICEs at low speeds, I fear that once EVs become the norm we are going to find that lots of EVs traveling at low speeds are awful

I don't know about most other EVs, but my Mach-E emits a low-pitched hum/white noise at low speeds. It does have a backup beeper that's quite loud, but either way - no pedestrians seem to notice I'm around. Guess the city is noisy enough to cover up all those sounds

 

[Frodo Douchebaggins]

I don't know about most other EVs, but my Mach-E emits a low-pitched hum/white noise at low speeds. It does have a backup beeper that's quite loud, but either way - no pedestrians seem to notice I'm around. Guess the city is noisy enough to cover up all those sounds

The one on the ID4 is, IMO, unnecessarily loud. Presumably the one on my Q4 is similar but I've never heard it from outside the car.

 

[case_ratchet]

This is all quite complicated.

I'm just going to buy a used ICE car and not drive it much.

 

[Anxiousele1980]

This isn't a point without merit, and I see where you're coming from - but mitigating climate change is also an all hands on deck situation. If China, Korea, and Germany are meeting demand for these technologies, then I don't ultimately have a problem with people buying their products. And the tax credit is a direct benefit to the buyer, not the manufacturer.

The tax credit creates additional demand though which makes me think it’s ok to specifically exclude China. Why should my tax dollars be going to China? Their goals are completely contrary to any democratic society.

 

[Snark218]

The tax credit creates additional demand though which makes me think it’s ok to specifically exclude China. Why should my tax dollars be going to China? Their goals are completely contrary to any democratic society.

Your tax dollars are not going to China. This is a tax credit, to the buyer. It's not a subsidy to the manufacturer.

 

[bburdge]

As far as I'm concerned, Manchin owes me $7,500 for yanking the rug out from under people and changing the tax credit mid-year last year. Alas, I'll just have to get an equivalent amount of satisfaction from pissing on his grave some day.

Christ, what an asshole.

So the only impact last year was the vehicle assembly location and sales price limits. The buyer income limits took effect Jan 1, and now the updated battery rules as of Apr 18.

So for the Mach-E I took delivery on 12/19 and I received the full 7500 credit in my 22 return. For anyone that purchased between Aug 17 and Dec 31, it's worth checking that your model does or doesn't qualify: https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit#/tab-2022

 

[ERIFNOMI]

Well, they did, but now with these obnoxious pedestrian noisemakers that cause EVs to be louder than modern ICEs at low speeds, I fear that once EVs become the norm we are going to find that lots of EVs traveling at low speeds are awful

I ranted a bit about this recently. I maintain my stance that the pedestrian alert noise is surprisingly loud, and the reverse indicator on our Mach-E is even louder still. However, I was saying I thought it might be as loud as, or even louder than, my actual Mustang in some circumstances. I think that's still true if my car is in quiet mode, which I use to get in and out of the neighborhood late at night. Not driving my car for months made me forget how loud it really is. In the modes above "quiet" it is pretty damn loud.

Still, this idea that EVs creep along silently is from before that rule was put into place. Modern EVs that alert pedestrians are anything but silent. It's not a noise that makes you immediately think "car coming" like the noise of an engine that has been burned into our brains over the past ~100 years. It'll probably take some getting used to.

 

[Frodo Douchebaggins]

So the only impact last year was the vehicle assembly location and sales price limits. The buyer income limits took effect Jan 1, and now the updated battery rules as of Apr 18.

Yup. Since I had ordered my car in 2021 and received it in December of 2022, I was not eligible due to the change. Manchin's fault.

 

[lasertekk]

This, all of it, shouldn't be happening. The path to easy and quick electrification of transportation needs to be taken, not this bureaucratic nightmare created by threatened interests who are sabotaging it constantly.

 

[bburdge]

Yup. Since I had ordered my car in 2021 and received it in December of 2022, I was not eligible due to the change. Manchin's fault.

I feel for you, I was definitely happy that my Aug 22 order arrived in Dec 22, 12 days later and I would have been ineligible.