VWhas become the first non-US automaker that qualifies for the full $7,500 US federal EV tax credit.
VW ID.4 federal tax credit eligibility
Volkswagen made its announcement of eligibility yesterday, two days after the US Treasury Department announced a list of qualifying EV models that were all made by US companies. VW was late to announce its eligibility because it was awaiting documentation from its battery supplier to send to the Treasury Department. The ID.4 models are now listed on the fueleconomy.gov website as eligible.
All model year 2023 ID.4 models placed in service this year are eligible because they’re manufactured in Chattanooga, Tennessee. VW is also sourcing the ID.4 batteries in the US.
Pablo Di Si, president and CEO of Volkswagen Group of America, said:
The ID.4 is already one of the lowest-priced electric SUVs on the market, and the $7,500 federal tax credit makes it even more attainable. This shows that we made the right decision to localize production of the ID.4 in Tennessee and invest even further in battery production, components, and innovation. Every ID.4 sold supports thousands of American jobs and helps advance our goal of a carbon-neutral future.
The 2023 ID.4 comes in two battery sizes and two powertrains.
The ID.4 Standard model has a starting MSRP of $38,995 that has a 62kWh battery and an EPA-estimated range of 209 miles. The ID.4 Standard is $31,495 after the $7,500 tax credit is applied.
The ID.4 Pro has an 82 kWh battery with an EPA-estimated range of 275 miles. A single permanent magnet synchronous motor powers the rear wheels and provides 201 horsepower.
The ID.4 AWD Pro model adds an asynchronous motor to the front axle, resulting in a bump to a max of 295 horsepower as well as AWD capability, and it has an EPA-estimated range of 255 miles.
Electrek’s Take
I bought a 2023 VW ID.4 AWD Pro late last year, and I really like it. It’s reliable, fun to drive, and it felt solid in the snow. My car qualified for the full $7,500 tax credit. That was a great feeling.
If you decide to buy or lease an ID.4, check to see if you qualify for a state rebate or tax credit, too – I got a generous rebate from my utility, Green Mountain Power in Vermont, for going fully electric.
Remember that if you buy a car that qualifies for the full tax credit, talk to a tax adviser about how to ensure you get that credit. If you owe less than $7,500, then any unused tax credit just disappears – it doesn’t roll over to the next year.
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It's cool to note that Volkswagen is the only foreign automaker that offers a battery electric vehicle that is eligible for the full Federal Tax credit. Major updates come to the 2024 Volkswagen ID. 4 interior, including more power and a better infotainment setup.
Vehicles meeting both the critical mineral and the battery component requirements are eligible for a total tax credit of $7,500. Vans, sport utility vehicles, and pickup trucks must not have an MSRP above $80,000, and all other vehicles may not have an MSRP above $55,000.
4. Volkswagen has exciting news for electric vehicle enthusiasts in the U.S., as the all-electric ID. 4 model will regain eligibility for the full $7,500 federal tax credit in 2024.
As previously mentioned, qualifying terms for electric vehicles became more strict at the start of 2023, and EVs and their battery components must be assembled in North America to qualify.
Modified adjusted gross income limits are $150,000 for individuals, $225,000 for heads of households, and $300,000 for joint returns. Any reported annual income below these thresholds should qualify you for some level of tax credit, as long as your new purchase is a qualifying electric vehicle.
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
If you don't owe any money on your income taxes, the only way to take advantage of the federal EV tax credit on a car is to transfer it to the dealership you're buying from. It then can be applied as a discount on the purchase.
The used EV tax credit will only apply once in the vehicle's lifetime. Subsequent owners will not be eligible. Once a buyer has taken the federal used EV credit, they are not eligible for another credit for three years. The vehicle must be for personal use and "not for resale."
Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit equals 30% of the sale price up to a maximum credit of $4,000.
The all-wheel-drive version is rated at 263 miles; the rear-drive version is rated at 291 miles. In our testing, the all-wheel drive version delivered a real-world range of 240 miles. EPA estimates for the ID.4's base 58.0-kWh battery pack sit at 206 miles.
By transferring the credit to the dealer you will receive the full credit (regardless of your overall tax liability) at the time of sale in either cash or a reduced down payment. The dealer must be registered with the IRS, which checks in real time if a car is eligible for a credit and for how much.
“Automakers already are significantly reorienting their supply chains.” Under the final rule, EVs will no longer qualify for the federal tax credit if they contain battery components that were manufactured or assembled by a Chinese firm.
EV tax credit casualties include the Tesla Model 3 Rear Wheel Drive and Long Range trims. The Model 3 Performance still qualifies, as do Tesla's Model X Long Range, Model Y All-Wheel Drive, Model Y Performance and Model Y Rear-Wheel Drive.
Volkswagen ID. 4 EVs with LG batteries do not qualify. Customers interested in purchasing a MY 2023 or MY 2024 ID. 4 EV may choose to apply the tax credit as a down payment for the vehicle.
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