The Biden administration issued guidance Thursday that clarifies electric vehicles that qualify for tax credits and included a solution that would allow a wide range of vehicles to be eligible.
Under the Inflation Reduction Act (IRA), which President Biden signed in August, the Treasury Department said in its announcement, regular consumer electric vehicles will be eligible for the $7,500 commercial clean vehicle credit if they are leased instead of purchased. An alternative solution would allow dealers or companies that rent cars to collect credit on rental electric vehicles that, if purchased, would not qualify for tax relief.
“In providing today’s guidance, the Treasury Department is simply following tax and IRA laws as written,” a Treasury spokesperson told FOX Business Thursday night. “The tax laws that govern what property is for lease and what is legitimate commercial use—and therefore what falls under a 45-watt credit for commercial vehicles purchased for use or lease—are long-standing, stable, and clear.”
According to the Treasury Department, a “qualified clean commercial vehicle” is a vehicle made by a qualified manufacturer, acquired for use or rental by a taxpayer and “propelled substantially” by a battery electric motor. Any rental electric vehicle that meets the general requirements and is less than EGP 14,000 will be eligible for a $7,500 credit.
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Interpreting the definition of commercial vehicles allows consumers to avoid the more stringent requirements implemented by the IRA that electric vehicles must meet to be eligible for credit if purchased. To be eligible under the new law, EVs purchased must have undergone final assembly in North America; cost less than $55,000 or $80,000 for pickups, SUVs, and vans; It is purchased by an individual whose annual income is less than $150,000 USD or a family whose annual income is $300,000 USD.
In addition, the Biden administration said it would begin enforcing a fourth qualification for electric vehicles purchased in March. The qualification states that at least 40% of the critical metals in an EV battery purchased must be mined or processed in the United States or in a country that has a free trade agreement with the United States.
Sen. Joe Manchin, DW.Va. , who played a large role in crafting the IRA’s tax credit requirements and paying the bill, slammed the Treasury Department’s announcement Thursday, arguing it would allow companies to exploit loopholes. He added that he would draft new legislation during the next Congress to clarify the intent of the law.
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“Information released today from the Treasury Department outlining how to implement the commercial and depreciation tax credits for electric vehicles bows to the wishes of companies looking for loopholes and clearly runs counter to the intent of the law,” Manchin said in a statement. The directive was issued on Thursday. “It only serves to impair our ability to become a more energy-secure nation.”
Manchin also criticized the administration for delaying implementation of critical minerals provision until March, saying he “cannot understand why a Biden administration would issue guidance that would ensure we continue down this path,” and noted that the IRA has stated that the rule should be in place by January. . .1, 2023. Globally, critical mineral supply chains that are vital to EV production are dominated by hostile nations such as China and Russia.
While many electric vehicles are set to expire when purchased in 2023 under an IRA, Thursday’s guidance means tax credits will eventually still be collectible on expensive sports cars when leased. The federal government previously released a long list of electric vehicles, which included cars made by high-end brands such as Bentley, Ferrari, McLaren, Mercedes-Benz and Porsche, eligible for the credit if they were purchased in 2022 or earlier.
For example, a Bentley Bentayga Hybrid SUV — which has a starting price of about $167,000, according to Car and Driver — qualifies for a $7,500 commercial clean vehicle credit if it is leased under Treasury Department guidance.
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In addition, a Ferrari 296 GTB that costs approximately $323,000, a McLaren Artura that costs approximately $237,000, a Mercedes-Benz that costs $105,000, and a Porsche Taycan that costs $84,000 will all be eligible for the credit.
“These are floral motifs for most people. They’re to show that you’re a good person because you have an electric Mercedes,” Dan Kish, senior fellow at the Free Market Research Institute, Energy Research Institute, told FOX Business. “This kind of signaling virtue — when people are struggling to survive — is just the kind of elitist mentality that seems to surround a lot of the whole green agenda.”
He added, “Even when you put limits around it, as we’re told they did, it turns out that the Treasury writes its own rules.”
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