New Tax Credits Make Electric Vehicles More Affordable in Georgia

In August of this year, President Biden signed into law sweeping new climate change legislation called the Inflation Reduction Act. It funds many new investments in technologies that will help our country reduce greenhouse gas emissions, including new tax credits supporting a range of Drawdown Georgia climate solutions, such as electric vehicles.

This blog post is part of a series of posts about how Georgians can utilize these new tax credits.

Electric Vehicles Reduce Emissions in Georgia

Drawdown Georgia electric vehicle charging

A growing number of electric cars, trucks, and SUVs are driving on Georgia roads and being made in Georgia factories. Electric vehicles (EVs) are one of Drawdown Georgia’s high-impact climate solutions for our state, as switching from an internal combustion engine to an electric vehicle cuts greenhouse gas emissions. This is particularly important in Georgia where transportation emissions are the largest source of greenhouse gas emissions statewide.

But purchasing an EV, or any car, truck or SUV, is a significant financial investment.

New federal legislation called The Inflation Reduction Act (IRA) includes tax credits that can lower the cost for most Georgians in the market for either a new or used electric vehicle.

Tax Credits for New Electric Vehicles

The new Clean Vehicle Credits from the IRA officially kick in on January 1, 2023. Until then, there are some credits available thanks to an existing federal policy.

calculating tax incentives for electric vehicles

New EVs purchased in 2022

For cars purchased before January 1, 2023, the Federal EV Tax Credit gives customers up to $7,500 for the purchase of new electric vehicles. For vehicles purchased and delivered between August 16, 2022, and December 31, 2022, the tax credit is available only for qualifying electric vehicles for which final assembly occurred in North America.

These credits have sales caps for specific car manufacturers, and several manufacturers have reached these sales limits, such as Tesla and GM. Therefore, tax credits are not currently available for those automakers. The U.S. Department of Energy has set up a website to help people understand which electric vehicles may qualify under current rules.

New EVs purchased 2023-2033

Beginning January 1, 2023, the new EV federal tax credit program established by the IRA begins. It runs through the end of 2032. The program provides up to $7,500 for qualified EVs meeting requirements such as:

  1. Vehicles must be assembled in North America using critical minerals and battery components sourced domestically or from qualified partners.

  2. Vehicles must have a manufacturer’s suggested retail price of $80,000 or less for pickup trucks, vans, and SUVs and $55,000 or less for other vehicles, including sedans.

This new tax credit program will no longer include sales caps for car manufacturers. So, automakers such as Telsa and GM will be eligible for the new credit.

In order to utilize the tax credits, the purchaser must qualify based on income requirements.

Income Limitations for Different Tax Status: New EV Purchases

Single Head of Household Filing Jointly
$150,000 $225,000 $300,000

 

The new tax credit will also allow buyers to utilize the $7,500 discount immediately. Beginning on January 1, 2024, you can elect to transfer the credit to a qualified EV dealer. This allows the dealer to immediately lower the purchase price. By using the credit as a rebate at the point of sale, you will not have to wait until tax season to reap the savings.

woman plugging in an ev

Tax Credits for Used Electric Vehicles

For the first time, the IRA includes tax credits for qualified used vehicles. This credit also starts on January 1, 2023, and runs through the end of 2032. It allows for up to $4,000 for qualified used vehicles. Used vehicles must be at least two years old and cost $25,000 or less.

As with new EV purchases, buyers will be able to transfer the credit to a qualified car dealer starting on January 1, 2024, which will allow people to immediately lower the purchase price.

In order to utilize the tax credits, the purchaser must qualify based on income requirements.

Income Limitations for Different Tax Status: Used EV Purchases

Single Head of Household Filing Jointly
$75,000 $112,500 $150,000
 

Commercial Vehicles

Finally, for the first time, the IRA includes tax credits for commercial vehicles. These are vehicles that are used for business purposes and can support businesses as they transition their fleets to cleaner options.

The credit is up to $7,500 for vehicles with a gross vehicle weight rating of less than 14,000 pounds and up to $40,000 for vehicles with a gross vehicle weight rating of more than 14,000 pounds.

The credit starts on January 1, 2023, and runs through the end of 2032.

electric car charging at home

Learn more about EVs in Georgia

To learn more about how to make the switch to an Electric Vehicle in Georgia, check out the Drawdown Georgia Climate Solutions Toolkit on EVs authored by experts at the Southern Alliance for Clean Energy.

 

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About Author

Blair Beasley
Blair Beasley

Blair Beasley is the Director of Climate Strategies at the Ray C. Anderson Foundation.

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