Tax credits for the purchase or lease of EVs

The U.S. Department of Treasury and Internal Revenue Service (IRS) has released three key pieces of clarifying information for consumers, businesses and other entities seeking to utilize the tax credits for the purchase or lease of EVs: 1) Frequently asked questions about the new, previously-owned and commercial clean vehicle credits (Sections 30D, 45W and 25E), 2) a notice clarifying the incremental cost in 2023 for commercial clean vehicles (Section 45W), and 3) a notice signifying the intent to propose regulations on the clean vehicles credit (Section 30D). The proposed guidance on the new sourcing provisions for the clean vehicles credit (Section 30D) will come in March, along with a notice of proposed rulemaking, according to the Treasury.

In response, Electrification Coalition Executive Director Ben Prochazka released the following statement:

“Oil has a monopoly on U.S. transportation which puts us at a great economic and national security risk.  By accelerating the transition to EVs, we can reduce the risk of our oil dependence. The tax credits and incentives in the Inflation Reduction Act will make America safer by accelerating this transition and helping to facilitate a secure, reliable, and sustainable supply chain.

“The information released today is an important step to clarify the new requirements for consumers, businesses, and state and local governments planning to buy electric vehicles soon. While the proposed guidance for sourcing provisions was not released today, a whitepaper on the direction the Treasury Department may take was released. The whitepaper helps clarify as manufacturers identify which vehicles may be eligible for the tax credits and when the new requirements go into effect.

“The EC applauds the Treasury for sharing initial thoughts on the sourcing provisions for the Section 30D credit. This preliminary information is helpful to manufacturers seeking to make their EVs eligible and to help consumers as they consider purchasing an EV. The early information appears to be a common-sense and straightforward approach that looks to accelerate adoption but we will still need to keep our eyes on the road to create a strong and reliable allied supply chain as the final rules are written. We look forward to seeing the actual proposed guidance when it is released in March.