Inflation Reduction Act saves thousands on EVs for Michiganders
TL/DR –
The Inflation Reduction Act in the US, implemented under President Joe Biden, has significantly reduced the costs of new or used electric vehicles (EVs) for buyers through federal tax incentives. The average savings per vehicle sold this year in the US is $6,900, a total of $600 million. Additionally, the Act has boosted Michigan’s economy, attracting big-name manufacturing projects and establishing the state as a major player in clean energy manufacturing.
Vehicle Buyers Benefit from Tax Incentives under the Inflation Reduction Act
According to a recent US Treasury report, electric vehicle (EV) buyers are reaping significant savings this year through federal tax incentives provided under President Joe Biden’s Inflation Reduction Act. These savings contribute to Michigan’s status as a major player in clean energy vehicle manufacturing.
Several big-name manufacturing projects connected to EVs and battery manufacturing have been attracted to Michigan. This is boosting the state’s economy and generating more jobs. Michigan is fast becoming a leading hub for clean energy manufacturing, as reports indicate.
The Inflation Reduction Act’s Impact
Under the Inflation Reduction Act, consumers buying specific new electric vehicles or qualified plug-in hybrids can claim a tax credit up to $7,500 for new vehicles, and $4,000 for used ones.
Furthermore, buyers no longer need to wait till filing their annual tax returns to claim the credit. Instead, they can receive it upfront at the dealership to offset their down payment. These federal tax credits are estimated to have saved Americans an estimated $600 million on clean vehicle purchases, reports the US Treasury.
Moreover, the declining cost of EVs has led to a significant price drop, making them potentially cheaper than comparable gas-powered models after accounting for federal tax credits.
A recent analysis also revealed that Michigan drivers could save over $20,000 over a decade by choosing an EV over a similar gas-powered model.
Qualifying for the Federal Tax Credit
Several factors determine whether new and used electric vehicles qualify for the federal tax credit. These include the vehicle’s price, the materials used for battery assembly, and whether it was assembled in North America.
Buyers must purchase the vehicle for personal use and their adjusted gross income (AGI) should not exceed certain thresholds—$75,000 for individuals purchasing used cars and $150,000 for those buying new cars.
Why Implement these Incentives?
The Biden administration introduced these incentives to foster the growth of a clean vehicle industry and cut down reliance on fossil fuels. With an impressive record of nearly 1.5 million clean energy vehicles sold in the US last year, the plan appears to be yielding results.
As the tax incentives continue to boost demand for EVs, Michigan could play a significant role in the shift to cleaner energy.
Additional Savings on the Horizon
In December, Governor Gretchen Whitmer of Michigan proposed a new state tax rebate to offer additional savings on new vehicle purchases. Under this plan, all new gasoline-powered cars would be eligible for a $1,000 rebate, and electric vehicles would be eligible for a $2,500 rebate, enabling a total savings of up to $10,000 off the cost of a new electric vehicle in Michigan.
MORE: Lansing to get 50 new EV chargers due to Biden administration funds
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