Demand for electric vehicles is skyrocketing, especially after a new federal law offering a tax credit up to $7,500. But if you don’t do your research, you could miss out on that tax break because not all cars qualify.
“Those qualifications depend on the car, they depend on the buyer’s income, they depend on where the car’s made, and where even some of the parts of the car are made,” says Keith Barry from Consumer Reports.
The federal government has yet to make clear which vehicles will actually earn a tax credit. The U.S. Department of Energy has put out a list of vehicles that ‘may’ qualify.
There are many American 2022 models including the Chevy Bolt, Jeep Grand Cherokee plug-in hybrid, Ford Mustang Mach E, Chrysler Pacifica and Tesla’s four models. Foreign brands include the Audi Q5, BMW X5, Nissan Leaf and Volvo S60.
But experts say the tax rules could change before the credit takes effect next year, and the list could change, so car shoppers should not assume a tax credit.
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“I’d postpone my buying decisions until I found out whether it actually did qualify or not,” Barry says.
Many states also offer tax credits and other incentives for eco-friendly vehicles. Experts say people in the market for an electric car should base their decision on the overall quality and price of the vehicle and the tax break shouldn’t be the only factor.