Paul Jacobson mentioned that GM is still evaluating the full extent of the charges and may incur additional costs in the second quarter. He added that the company will provide further information about the buyout program during its first-quarter earnings call scheduled for April 25.
Although most of the guidelines for electric vehicle (EV) tax credits have already been implemented, the final standards for batteries and minerals were delayed as the Treasury Department worked on defining processing, extraction, and recycling. However, this guidance has now been released and will be effective from April 18. In order for an EV to qualify for the full $7,500 credit in May, 50% of the value of its battery components must be manufactured or assembled in North America, and 40% of its critical minerals must be sourced in the US or a trade-partner country.
The Treasury Department has not yet published the list of EVs that meet these standards, and this will only be released on April 17, further complicating an already intricate process. The federal government provides incentives to encourage Americans to switch to electric vehicles (EVs) by allowing taxpayers who purchase the qualified plug-in, hybrid, or fuel-cell vehicles to claim a credit on their tax return, according to IRS Code Section 30D. This credit is referred to as the EV tax credit or clean vehicle credit and can go up to a maximum of $7,500, depending on the battery capacity of the vehicle. Specifically, the credit is equal to $2,917 for EVs with a battery capacity of at least 5-kilowatt hours (kWh), plus $417 for every additional kWh of capacity over 5 kWh. It is important to note that this credit is nonrefundable, which means that you cannot receive more money than what you owe in taxes.
Applying for the tax credit
In order to be eligible for the EV tax credit on your 2022 tax return, the following requirements must be met: the vehicle must have been purchased before Jan. 1, 2023, be used primarily in the US, have an external charging source, and have a gross vehicle weight rating of fewer than 14,000 pounds. Additionally, if the vehicle was purchased last year, it must have been produced by a manufacturer that has not sold more than 200,000 EVs in the US. However, this limitation has been lifted for 2023 models from Tesla and Ford. If the EV was purchased between Aug. 17 and Dec. 31, 2022, it must have undergone final assembly in North America.
If a written binding contract was entered into after Dec. 31, 2021, but before Aug. 17, 2022, the final assembly requirement does not apply. To claim the credit for an EV acquired in 2022, file IRS Form 8936 with your 2022 tax return. If you missed claiming the credit for an electric vehicle purchased before 2022, you may be able to claim it by filing an amended return for the tax year when you took possession of it. The EV tax credit, also known as the clean vehicle credit, is a nonrefundable credit under IRS Code Section 30D, equal to $2,917 for a vehicle with a battery capacity of at least 5 kWh and $417 for each kWh of capacity over 5 kWh, with a maximum credit of $7,500.