The critical minerals requirement plays a significant role in determining the tax credit for new electric vehicles (EVs) under the Inflation Reduction Act. Here’s how it affects the tax credit:
Eligibility Criteria
- Critical Minerals Percentage: The percentage of the value of critical minerals in an EV’s battery must be extracted, processed in the United States, or in a country with which the U.S. has a free trade agreement, or recycled in North America. This percentage requirement increases over time:
- 2023: 40%
- 2024: 50%
- 2025: 60%
- 2026: 70%
- 2027 and after: 80%
Tax Credit Amount
- Critical Minerals Credit: If an EV meets only the critical minerals requirement, it qualifies for a $3,750 tax credit.
- Combined Credit: If an EV meets both the critical minerals and battery components requirements, it qualifies for the full $7,500 tax credit.
Exceptions
There is a temporary exception for “non-traceable critical materials,” such as graphite, which may not require tracing until January 1, 2027, provided manufacturers submit compliance reports during the transition period.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-critical-minerals-requirement-affect-the-tax-credit-for-new-evs/
