Hybrid vehicles must meet specific criteria to qualify for current federal incentives, primarily under the Inflation Reduction Act:
- Vehicle Type: The vehicle must be a plug-in hybrid electric vehicle (PHEV) or fully electric vehicle. Traditional non-plug-in hybrids like the standard Toyota Prius or Honda CR-V Hybrid do not qualify.
- Manufacture Location: The vehicle must be assembled in North America (United States, Canada, or Mexico) to qualify for the tax credit.
- Manufacturer’s Suggested Retail Price (MSRP): The MSRP must be $80,000 or less for SUVs, vans, and pickup trucks, and $55,000 or less for sedans, hatchbacks, wagons, and other passenger vehicles. This MSRP limit is based on the vehicle’s MSRP including options, not the sale price.
- Battery Requirements: To qualify for the full $7,500 credit, the vehicle’s battery must meet critical minerals and battery component sourcing requirements. Partial credits ($3,700) are available if the vehicle meets either the critical minerals or battery components requirement, and the full credit if it meets both. These rules include a percentage of the battery’s key materials needing to be sourced from the U.S. or from countries with free-trade agreements with the U.S.
- Income Limits: The buyer’s modified adjusted gross income (MAGI) must not exceed certain thresholds: $300,000 for joint filers, $225,000 for head of household filers, and $150,000 for single filers.
- Other Conditions: The Environmental Protection Agency determines the classification of the vehicle type (e.g., SUV, wagon), which impacts MSRP thresholds and qualification.
- Leasing Note: If a hybrid vehicle is leased, the credit is claimed by the leasing company, which may reduce the lessee’s payments but does not directly go to the buyer.
In summary, to qualify for federal tax incentives, hybrid vehicles generally must be plug-in hybrids or fully electric, assembled in North America, priced below MSRP caps ($80,000 or $55,000 depending on type), meet battery sourcing requirements, and be purchased by buyers within income limits. Traditional hybrids without plug-in capability do not qualify for these credits.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-specific-requirements-for-hybrid-vehicles-to-qualify-for-incentives/
