The US and Massachusetts legislatures simultaneously passed new electric vehicle (EV) purchase rebates and incentives in August. Governor Baker signed the MA Bill on August 11 and President Biden signed the US Bill 5 days later on August 16. No question they have both significantly changed the EV landscape going forward. In fact, in MA, the sale of new non-zero emission vehicles will cease as of January 1, 2036. The great thing is that EVs are already awesome now. So, by then we might just be referring to them as “vehicles”.
The MOR-EV rebate program will be expanding and offering better incentives.
As final program funding has not yet been authorized, the current MOR-EV rebates and structure will continue. Once funding is finalized, however, the new parameters for passenger cars and light duty trucks will be as follows:
- Eligible vehicles will include new and USED EVs purchased from a licensed dealer.
- The EV purchase rebate increases to $3,500.
- Qualified low-income residents receive an additional $1,500 rebate (income limits still to be determined).
- The EV purchase price limit increases to $55,000.
The MOR-EV program has also been given the authorization to offer rebates as a point-of-sale basis. Details are not yet final for that provision. One other helpful aspect of the new program is that MassCEC will be required to develop a guide and website that details the cost and availability of electric vehicles.
The new federal incentives feature slightly more specific parameters than their predecessors.
As of 8/16/22, the old tax credit ceases for EVs assembled outside of North America (US, Canada & Mexico) unless you have a binding purchase order signed prior to that date. For those EVs still meeting the new assembly requirements, the previous restrictions apply until the end of this year.
The redesigned $7,500 credit resumes on January 1, 2023 and extends for the next 10 years. While the old program capped each auto manufacturer at 200,000 EVs sold, the new incentive removes any sales volume restrictions and allows Tesla, GM and Toyota buyers to be eligible again. This means, beginning in 2023, all automakers will qualify if the following requirements and conditions are met:
- Sedans – prices capped at $55,000.
- SUVs, pickups and vans – prices capped at $80,000.
- Adjusted gross income capped at $300,000 for joint tax filers, $225,000 head of household or $150,000 for single tax filers.
- EVs must continue to go through final assembly in North America.
- Vehicles must have US sourced critical mineral content and battery manufacturing components.
- Annually, vehicles need to contain an increasing fraction of materials and components from North America or a free trade agreement country.
- Compliant EVs will be eligible for rebates of $3,750 each or $7,500 if a vehicle meets both mineral and content restrictions.
- Plug-in hybrids (PHEVs) will receive the full credit if they fulfill the same content requirements and have at least a 7 kWh battery.
- Tax filers will only be eligible to claim the new EV purchase credit once every 3 years.
What about Used EVs?
There is also a new EV purchase credit for used zero emission vehicles. This credit is $4,000 or 30% of the sales prices, whichever is less. Other conditions include:
- Vehicles must be priced less than $25,000 and be at least 2 years old.
- Qualifying income caps of $75,000, $112,500 and $150,000 for single, head of household or joint tax filers, respectively.
- The incentive can only be claimed once in the life of the vehicle.
Interestingly, beginning in January 2024, the EV purchase credit will be assignable to car dealers so that buyers can use it as part of their down payment or a point-of-sale rebate. Prior to 2024, the purchase incentive will still be processed on your income tax return as a tax credit.
Which Vehicles Will Qualify?
We do not yet know exactly which cars will qualify for these incentives, nor the exact credit eligibility for each model as of January 1, 2023. That said, the government does have a website that indicates which EVs are currently eligible based on the final assembly requirement. Presumably, critical mineral and battery component information will also be detailed before the end of the year. You can view the US DOE website here: Eligible EVs
What about Charging Incentives?
The tax credit for installing home charging equipment has been reinstated for calendar year 2022 and will run until 12/31/32. It will now also cover installed bidirectional charging equipment. The tax credit is equal to 30% of the total cost to buy and install charging equipment up to $1,000.
Have Questions? Contact Us!
As always, we are here to help you understand the current and upcoming incentives, discuss the merits and features of all available EVs and to help you on your EV Journey. Happy Charging!