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Extra $7,500 Tax Credits Now Available to Americans

Tesla Motors Chairman and CEO Elon Musk (in driver's seat) and chief designer Franz von Holzhausen (in passenger seat) drive the new Tesla Model S all-electric sedan as members of the media look on, at the car's unveiling in Hawthorne, California on March 26, 2009. Musk said the state-of-the-art, five-seat sedan will be the world's first mass-produced, highway-capable electric car. The car has an anticipated base price of 57,400 US dollars but will cost less than 50,000 after a federal tax credit of 7,500 dollars. AFP PHOTO / Robyn BECK (Photo by Robyn BECK / AFP) (Photo credit should read ROBYN BECK/AFP via Getty Images)

Americans will no longer need to worry if the lack of a federal tax credit has kept them from purchasing specific Tesla Model Y variations or other electric cars or vehicles.

The price barrier has been raised from $55,000 to $80,000 by the Treasury Department, which also makes more EVs eligible for the full $7,500 credit offered by the Internal Revenue Service (IRS) under the Inflation Reduction Act.

That should include five-seat variants of the Model Y (only seven-seaters previously qualified), the Cadillac Lyriq, the Ford Mustang Mach-E, the Ford Escape Plug-in Hybrid, and the VW ID.4, as explained by Autoblog.

Tax Credit Electric Vehicle

The new Renault electric utility vehicle Kangoo Express ZE is on show at the Paris motor show on September 30, 2010 during a press day. The Kangoo Express ZE is to be sold for some �15.000 in France and about �20.000 in Europe, not including the annual rental of the battery and state incitation tax rebate. The show will open to the public on October with 300 brands from 20 countries. AFP PHOTO MIGUEL MEDINA (Photo credit should read MIGUEL MEDINA/AFP via Getty Images)

IRS’s public feedback on a planned modification led to a change of heart. Elon Musk, the CEO of Tesla, soon after requested input from his Twitter followers. 

CNBC added that other automakers, including GM and Ford Motor Company, campaigned to amend the criteria before the final standards are revealed next month.

Americans Eligible For $7,500 Tax Credit If They Buy Electic Vehicles

Some of the most well-known EVs weren’t eligible under the previous standards. It would be more difficult to achieve the Biden administration’s climate targets and encourage EV adoption if consumers couldn’t find discounts on the most popular models.

Reuters (via MSN News) said the Treasury broadened the categorization by applying the Environmental Protection Agency (CAFE) public-focused Fuel Economy Labeling standard instead of using the Corporate Average Fuel Economy.

The agency added that this would aid in treating crossovers “consistently,” making it easier for the credit ratings to match what is displayed on the car’s label and the website, both run by the US government.

ALSO READ: Learn More About Education Tax Credits

Automakers Welcome the Move

Given that the crossover SUV vehicle is one of the fastest-growing car sectors, Zero Emission Transportation Association executive director Albert Gore said the increasing number of SUVs that are eligible for the full $7,500 tax credit might increase customer demand for EVs.

In a statement obtained by CBS News, Gore said Congress created the IRA and clean vehicle tax credit to accelerate the deployment of qualifying EVs and that the latest decision is a significant step in that direction.

“We have long advocated for the IRA’s tax credits to be as widely accessible as possible,” Gore said.

The previous restrictions were also resisted by General Motors, which earlier this month asked the Treasury to reevaluate how to classify its electric Cadillac Lyriq so that vehicle would qualify for the credits. The Lyriq is roughly $62,000 in price. 

GM stated that it was “excited” that consumers who are eligible for the tax credit would be able to utilize it to purchase the Lyriq SUV and that tax credits are a proven catalyst for accelerating the adoption of electric vehicles.

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