On May 3 the Internal Revenue Service (IRA) released new rules regarding provisions in the Inflation Reduction Act (IRA) designed to reduce the costs for consumers when purchasing battery-electric cars, with an eye towards improving the overall supply chain for both batteries and electric vehicles.
The new IRA rules allow consumers who purchase a new electric vehicle or plug-in hybrid to receive tax credits up to $7,500.
“President Biden’s Inflation Reduction Act has unleashed an investment and manufacturing boom in the United States. I’ve seen firsthand in Tennessee, North Carolina, and Kentucky how ecosystems have developed in communities nationwide to onshore the entire clean vehicle supply chain so the United States can lead in the field of green energy,” said Secretary of the Treasury Janet L. Yellen in a press release.
Additionally up to $4000 will be available to registered dealers for sales of previously owned electric vehicles and plug in hybrids. The Treasury indicates that in 2024 there have already been more than 100,000 credits transferred, saving more than $700 million for customers.
Additionally, tax credits for effectively tracking certain critical minerals used in the production of electric vehicles and their batteries and avoiding sourcing components or materials through designated “Foreign Entities of Concern” will be implemented. These credits can come to as much as $3,750 per vehicle for manufacturers.
