The New Vehicle Classifications for Federal Tax Credits
The U.S. Treasury Department has made an announcement regarding the new vehicle classifications that will allow more vehicles to be considered as SUVs and eligible for the updated EV tax credits. The recent change in rules considers the Cadillac Lyriq, the Ford Mustang Mach-E, the Tesla Model Y, and other vehicles to be SUVs, thus making them eligible under a higher $80,000 MSRP limit.
Changes in Vehicle Classifications
The U.S. Treasury Department has introduced new standards for the vehicle classifications, which are part of the Inflation Reduction Act (IRA). The IRA has given the decision of how to classify these vehicles to Secretary of the Treasury Janet Yellen, using criteria similar to those used by the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to determine the size and class of the vehicle.
Previously, the Treasury Department was classifying vehicles using the EPA’s CAFE standards, but it will now switch to a system based on the Fuel Economy Labeling standard. The Treasury Department has stated that if you purchased an EV in 2023 that previously didn’t qualify but now does, you can still claim the credit, as the change in rules is retroactive.
How This Affects Automakers and Buyers
The new rules have been supported by major automakers such as Ford, GM, and Tesla. GM stated that tax credits are “a proven accelerator of electric vehicle adoption” and said the Treasury’s “alignment” with the CAFE standards “will provide the needed clarity to consumers and dealers, as well as regulators and manufacturers.”
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For EV buyers, the change in rules means that a few vehicles that were previously subject to a lower price limit now qualify for the tax credit because they are considered SUVs instead of cars. The Cadillac Lyriq, the Ford Mustang Mach-E, the Tesla Model Y, and the Volkswagen ID.4 are some of the vehicles that have been specifically affected by this change.
The Treasury Department has said that “This change will allow crossover vehicles that share similar features to be treated consistently.”
More Details- Autogos.com
In conclusion, the new vehicle classifications will make more vehicles eligible for the updated EV tax credits, making it easier for buyers to access the benefits. The Treasury Department will further clarify its guidance on critical minerals and batteries in March 2023, providing more clarity on the changes made under the Inflation Reduction Act.