The "Inflation Reduction Act" recently was passed by the Senate and is on track to likely be passed by the House this Friday and signed into law by President Biden shortly afterwards. Of note are a number of significant changes to the electric vehicle (EV) / plug-in hybrid EV (PHEV) tax credit. Many existing cars will no longer qualify under the new rules, which include requiring North American assembly and requirements associated with the sourcing of materials used in the batteries. Most of the new EV credit info goes into effect on January 1, 2023, although the NA assembly requirement goes into effect when the bill is enacted and the battery sourcing requirements go into effect once the Secretary (of Transportation?) issues guidance.
However, there is a transition clause which applies if the buyer "before the date of enactment of this Act, purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle".
I have ordered a new car (a 2023 BMW 330e, which qualifies for a $5,836 tax credit under the existing rules) through a dealership. I have signed a build order, put down a large deposit, and received a VIN as the car is in production right now and due for delivery in about a month. However, it will not arrive before the bill is signed into law.
What tax credits, if any, would I qualify for?
- The old/existing tax credit? (Can I be grandfathered in under the transition clause? If so, is a signed build order and deposit sufficient to count as a "written binding contract to purchase" in the eyes of the IRS? Do I need to sign something else with the dealer this week prior to the passage of the bill into law?)
- The new tax credit? (Since the 330e is assembled in North America (Mexico), if I take receipt of the car and purchase it after the passage of the bill into law, but before the government issues battery sourcing guidance [see pg389, lines 16-19], would I qualify for the new tax credit? Or even the old tax credit?)
- Neither tax credit?
