If you’ve been thinking about buying an electric vehicle (EV), experts are advising you to make your purchase before the end of 2024 to take advantage of the up to $7,500 in EV tax credits. There are concerns that President-elect Donald Trump may eliminate this tax credit once he takes office next year. President Joe Biden’s Inflation Reduction Act, implemented in 2022, provided federal EV tax benefits until 2032 for individuals who buy or lease new or used EVs, including plug-in hybrid electric vehicles. The tax credit limit is $4,000 for used EVs and $7,500 for new ones. One of the major benefits of this mandate is that consumers can access the savings upfront during the purchase process, rather than waiting for tax season.
Jamie Wickett, a specialist in federal tax policy, energy, and the environment at Hogan Lovells, emphasized the risk of the EV tax credit disappearing next year. He suggested that consumers looking to buy an EV should consider moving their purchase to 2024 to reduce the risk of losing the tax credit. Trump has expressed his intention to eliminate the EV mandate to fund a broader tax-cut package, which could have significant economic implications.
Elon Musk, the CEO of Tesla and the wealthiest person in the world, has hinted that he supports the removal of subsidies, including EV tax credits. Trump’s transition team has also expressed full support for his campaign promises, including canceling the EV mandate. The potential elimination of green energy tax credits, including EV benefits, could have a significant impact on the economy.
For those considering leasing an EV before 2024, it is important to carefully review the contract terms. The US Treasury Department typically provides the tax credit as a discount on the vehicle at the time of purchase, with the dealer issuing an advance tax credit that is later refunded by the Treasury. Ingrid Malmgren, the policy director of Plug In America, recommends locking in savings in lease contracts over a multi-year term. However, with the possibility of Trump eliminating the tax credits, it is crucial to pay attention to potential clauses that could lead to an increase in monthly lease payments.
Overall, the future of EV tax credits remains uncertain, and consumers are encouraged to make informed decisions before the potential changes take effect. Stay informed and consider your options carefully to make the most of available incentives while they last.
