On March 31, 2023, the IRS and Treasury Department released long-awaited proposed guidance to provide clarification on the New Clean Vehicle Credit enacted under the provisions of the Inflation Reduction Act of 2022 (IRA). In a released statement, Treasury Secretary Janet L. Yellen touted the update as a “step that will help consumers save up to $7,500 on a new clean vehicle and hundreds of dollars per year on gas, while creating American manufacturing jobs and strengthening our energy and national security.”
The proposed guidance provides clarity and certainty to manufacturers about the IRA requirements regarding vehicle eligibility related to assembly location, sales price and sourcing requirements for critical materials and battery components, which will apply to new clean vehicles place in service on or after April 18, 2023. Though the credit is ultimately intended to benefit taxpayers, the proposed guidance effectively reduces current opportunities for consumers to take advantage of these tax incentives due to limitations in the available supply of eligible electric vehicles.
Additional details regarding the proposed guidance, as well as specific information about the requirements for vehicles to qualify for the credit, can be found in this Accounting Today article. The IRS also issued Updated FAQs to answer common questions related to the credit.
If you have additional questions related to this credit or need assistance with other tax issues, please contact your GYF Executive or call the office at 412-338-9300.