Battery and sourcing requirements play a significant role in determining the eligibility of electric vehicles (EVs) for the tax credit in the United States. Here’s how these requirements affect the eligibility:
Battery Requirements
To be eligible for the battery portion of the credit (up to $3,750), a certain percentage of the vehicle’s battery must be assembled or manufactured within North America. The percentage thresholds are:
- 2023: 50%
- 2024 and 2025: 60%
- 2026: 70%
- 2027: 80%
- 2028: 90%
- 2029 through 2032: 100%
Sourcing Requirements
The sourcing requirement pertains to critical minerals in the car’s battery. For the remaining $3,750 portion of the credit, a certain percentage of critical minerals must be extracted or processed within the U.S. or in countries with which the U.S. has a free-trade agreement. The thresholds are:
- 2023: 40%
- 2024: 50%
- 2025: 60%
- 2026 through 2032: 80%
Impact on Eligibility
- Full Credit Eligibility: Vehicles that meet both the battery and sourcing requirements are eligible for the full $7,500 tax credit.
- Partial Credit Eligibility: If a vehicle meets only one of these requirements, it may be eligible for a partial credit of $3,750.
- Stricter Requirements Over Time: As the requirements become more stringent in future years, some vehicles may fail to qualify for the credit that were previously eligible.
In summary, battery and sourcing requirements are crucial for determining the eligibility of EVs for the tax credit. Meeting these requirements can significantly impact the amount of the credit available to buyers of new electric vehicles.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-battery-and-sourcing-requirements-affect-ev-tax-credit-eligibility/
