EV Tax Credit
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I do not have link. Just a general question about the eligibility with current and up and coming ev tax laws and regulations.
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I am targeting the WT trim model for 39k plus taxes. Dealership said it should open to customer beginning 2024 once it gets to fleets first.
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Probably. I was not planning until 2024 anyway
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The first thing all the sites that talk about it should say is “ you have to owe the fed 7,500 to get that tax credit. “ 60% of Americans don’t owe that anything to the fed . And even many who do , don’t owe that much .
If your were to owe 1,000 bucks back that’s what you’d get ,not the rest of of it .
The truck will be made here in America and so will the battery’s .
But the only real way to know if the truck qualifies is to get its Vin number and run it through the feds website to be sure it completely gets the full tax credit.
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Still my point is the average American doesn’t pay that kind of tax . And what’s going to happen is thousands of people will find out they don’t only after going threw everything else to find out if the car or the truck is eligible and the dealers even the car or truck . You know dame well the dealer isn’t going to warn you . And as I stated before those that do owe don’t owe that much . So even the well to do will be caught off Guard.
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I think you are misunderstanding how tax credits work.
The average American household does, in fact, pay that kind of tax.
According to this chart Median Household Income by State 2023 (worldpopulationreview.com) the median household income (half make more, half make less) looks to be between $60-70K. Federal Income taxes on $65K run pretty close to the $7,500 tax credit amount, so the median household, would be able to use most, if not all of the tax credit to reduce their tax in the year of purchase to zero, and claim a refund for all taxes withheld over the course of the year.
The average American household does, in fact, pay that kind of tax.
According to this chart Median Household Income by State 2023 (worldpopulationreview.com) the median household income (half make more, half make less) looks to be between $60-70K. Federal Income taxes on $65K run pretty close to the $7,500 tax credit amount, so the median household, would be able to use most, if not all of the tax credit to reduce their tax in the year of purchase to zero, and claim a refund for all taxes withheld over the course of the year.
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I agree with @HawaiiEV's general sentiment that right now, there are many BEV and PHEVs that are an extravagance for moderately wealthy folks. To @Burbman's point, while base-model Bolts, Leafs, Prius Primes, and Model 3s represent the spirit of what the alternative fuels legislation is pushing for, your average buyer for EVs in 2023 is not your average taxpayer. This suggests the pro-EV legislation could be unfair and bad policy if the goal is to get everyone into an EV right now... but it is what it is.
So, IMO the EV tax credit is fairly straightforward and easy to implement/review. I don't think there are going to be too many people "caught off guard". The IRS has published a fairly concise and easy to understand list of eligible vehicles. And the list is updated all the time as new make/models emerge.
Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After | Internal Revenue Service
List of vehicles that are eligible for a 30D clean vehicle tax credit and the amount of the qualifying credit, if purchased between 2023 and 2032.
But, consider there is another part of the recent inflation reduction act (IRA) where there are incentives for people to make upgrades to their home to improve efficiency and transition away from natural gas. DeSantis not withstanding, most people agree burning natural gas to heat a home or cook meals is an antiquated approach. For most, getting new/efficient electric appliances makes sense in almost every normal use-case.
This part of the IRA is more up your alley since it was written to help everybody (even folks who don't pay taxes); not just rich EV customers. So instead of this incentive being a tax-break, it is a discount/rebate to be paid to the customer+contractor. Plus there are much more strict qualifiers based on income, and someone making above the median would actually struggle to qualify. As a result, the IRA language for these home energy improvements is insanely complicated.
It's not a matter of just picking Energy Star rated appliances; or windows with a certain U-Factor; or a certain heat-pump COP. Rather the incentive has to be managed through the contractor doing the work, and the upgrade has to prove energy efficiency to qualify. Talk about a potential huge headache/mess. What happens if the rebate isn't paid? What happens if the rebate amount is less than what was sought? Who ends up paying? The homeowner or the contractor?
Luckily for EV buyers, things are waaaayyyy more simple as a tax-break.
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The full tax credit $7500 for individual liability is nearly $70k. The US MEAN individual, not median income is closer to $55k. For a family the mean is closer to $120k which is enough for the full credit with just one child. Being able to afford an $80k pickup on such an income is another matter, and traditional pickup buying customers are A LOT lower income than the mean average which includes a lot of very wealthy coastal states and cities. Washington DC being the most wealthy by average in the country. No doubt these rich coastal states and urban centers are what GM is targeting with their truck as are most EV manufacturers. They are NOT for average Americans, the kind that traditionally buy pickups.
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Since people usually want to see data cited... below is the backup showing the Census data from 2020. The nationwide "median family household" is nowhere near $120k... the median was $86k in 2020. But the Census didn't publish a nationwide mean. Annoying. But, other data (see below) has the California mean household around $120k.
There is a big gap between median and mean... so as you called out, people should make the distinction instead of saying "average." I guess in a perfect world, this data would simply be provided by the IRS... but family status isn't a field on the 1040.
I agree, the target demographic (individual or family) that can afford a reasonably priced (like reality-pricing, not the teased BS price on Chevy's website right now) WT is still going to need a $125k+ household income. Don't forget the maximum income for single earners to get the $7,500 tax break is $150k... and it's $300k for joint filers.
The TrailBoss/RST they keep flashing on Super Bowl adverts will be $80k to $100k (transacted as $95k to $120k after DFC/taxes/doc-fees). The target buyer for those trims will be the $200k+ or more households. And of course, a $80k truck won't qualify for the $7,500 tax break.
Census Website:
Income and Poverty in the United States: 2020
This report presents data on income, earnings, income inequality & poverty in the United States based on information collected in the 2021 and earlier CPS ASEC.
www.census.gov
Summary for HawaiiEv's favorite "rich coastal" state of California.
Median Household Income in California
Find out the median household income in California, as well as a breakdown of income by age, gender, city and ZIP code.
www.creditkarma.com
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I chose Median rather than Mean because Median is less skewed by a few extraordinary households. In this case Bill Gates counts as one "over", and the homeless man on the freeway offramp with the cardboard sign counts as one "under", and an average Joe family counts as the Median. When using Mean, the three would have an average income of several million dollars.
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Yeah, most policy is set around median to address the issue you described. I personally prefer median as well.
But let's not get mired in semantics. Regardless of which average you use... ultimately it's going to be individual households trying to budget for and trying to purchase a BEV truck. (Well, I'm sure there are some foolish impulse-buyers who don't know how to be financially responsible, but that's not going to be any one on this forum amirite?)
For a normal household making $125k... consider the typical USA debt to income ratio was about 145% in 2021 (The Fed - Table: State Debt-to-Income Ratio, 1999 - 2022). So that means the total household debt was 1.45x annual gross wages. Assuming a reasonable interest rate and principal pay-down of such a debt load... the impact to a monthly household budget will be about $4k a month on debt servicing (which is why borrowers cannot reasonably exceed a 40% monthly DTI when they take out a mortgage).
Assuming people spend money on homes as a primary and automobiles as a secondary (har har I know that's not the case for some), households simply shouldn't be spending $1k a month on a single car at this income level. Since most households require two vehicles, $1k a month for a single car is basically nuts unless the other car is paid off (edit, or it's a single person who just likes to blow $ on their ride).
So yeah, a $1,000 monthly payment is what you typically see when someone tries to finance a $60k vehicle (before doc fees and taxes and blah) over 72 months. The typical Silverado BEV buyer is going to be significantly above the nationwide median even with a $7,500 tax incentive.
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My point was and is that they do all different kinds of things to explain what cars and trucks are available for the tax break , and lots of info on your income levels to not go over .
But it’s takes lots of looking to see that you have to owe that tax to get it back .
The first thing anyone trying to find the right car or truck, is to see right up front that they will have to owe that tax .
Dealers are not going to be pointing that out . And the websites aren’t putting that fact up front and center , So people are going to be real happy the dealer has the car and that they qualify income wise to get it . Only to find out later that they aren’t getting that tax break .
Of course everyone when spending that kind of money should look at all details involved , but sadly they don’t .
But it’s takes lots of looking to see that you have to owe that tax to get it back .
The first thing anyone trying to find the right car or truck, is to see right up front that they will have to owe that tax .
Dealers are not going to be pointing that out . And the websites aren’t putting that fact up front and center , So people are going to be real happy the dealer has the car and that they qualify income wise to get it . Only to find out later that they aren’t getting that tax break .
Of course everyone when spending that kind of money should look at all details involved , but sadly they don’t .
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And if they were on a fixed income it’s very unlikely they would get a tax break .
I haven’t kept count but I’ve easily read 50 articles on what cars and trucks will get you a tax break . And the last one is typical of ones that actually even brought up ( many don’t even do that) that you have to owe tax’s . It’s was 14 paragraphs down .
By that time you’re obviously thinking that the car or truck you want is going to be your best bet . And the features you wanted are likely going to be in it .
And then if you luck out, you find out a dealer actually has one in stock, or will shortly .
You aren’t then ( as you should ) looking into the fine print so to speak ,to find out you need to owe that tax .
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Ok I can see where some people may get confused if they simply take the word of a Car Salesperson. I keep forgetting how car buyers are often mislead... sucks.
The reason the Solterra likely fails to qualify for the 2023 $7,500 tax incentive is due to where final assembly occurs for the vehicle. For 2023, only vehicles with final assembly in North America qualify. The final-assembly requirement did not exist in 2022.
The vehicles that qualify for the 2023 incentive is pretty short. But, I guess people won't take the 30 seconds to look this up before they purchase a vehicle. Ugh.
| Make and Model | MSRP Limit | Full Tax Credit |
| CADILLAC (GM) | ||
| Lyriq (2022-2023) | $80,000 | $,7500 |
| CHEVROLET (GM) | ||
| Bolt EUV (2022-2023) | $55,000 | $7,500 |
| Bolt EV (2022-2023) | $55,000 | $7,500 |
| FORD | ||
| F-150 Lightning (2022-2023) | $80,000 | $7,500 |
| Mustang Mach-E (2022-2023) | $80,000 | $7,500 |
| E-Transit (2022-2023) | $80,000 | $7,500 |
| NISSAN | ||
| LEAF SV, S Plus, SL Plus (2021-2022) | $55,000 | $7,500 |
| LEAF S / SV Plus (2021-2023) | $55,000 | $7,500 |
| RIVIAN | ||
| R1T (2022-2023) | $80,000 | $7,500 |
| R1S (2022-2023) | $80,000 | $7,500 |
| TESLA | ||
| Model 3 RWD/Long Range/Performance (2022-2023) | $55,000 | $7,500 |
| Model Y AWD/Long Range/Performance (2022- 2023) | $80,000 | $7,500 |
| VOLKSWAGEN | ||
| ID.4 / ID.4 S (2023) | $80,000 | $7,500 |
| ID.4 Pro/Pro S (2023) | $80,000 | $7,500 |
| ID.4 AWD Pro/AWD Pro S (2023) | $80,000 | $7,500 |
Had the couple signed paperwork and paid for their Solterra VIN in 2022, there's a chance they could sneak this in as a "2022 purchase with 2023 delivery". My understanding is that if the invoice says 2022 then it's more likely than not someone at H&R Block or whatever would accept the paperwork. Sort of like how some people paid for a solar array even if it hadn't passed inspection or received PTO to sneak in at the higher ITC (before the IRA simply bumped it back to 30% anyway).
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