Are you considering an electric vehicle? There are a lot of factors to weigh when making a large purchase, like a vehicle. For example, you may consider the overall purchase price, safety ratings, features, and even possible rebates.
It is nothing new that the federal government has been offering rebates for purchasing electric vehicles as part of the Plug-In Electric Drive Vehicle Federal Tax Credit. But what is new are the recent Illinois Electric Vehicle Rebate Program and federal updates under the Inflation Reduction Act.
Illinois Rebate In September 2021, Illinois governor JB Pritzker signed the Climate and Equitable Jobs Act (CEJA) into law. Part of the CEJA was the requirement to establish rebate and grant programs for electric vehicles and charging stations. As a result, on July 1st, 2022, the Electric Vehicle Rebate went into effect in Illinois. The rebate amount depends on whether the electric transportation is a vehicle or a motorcycle and the year the transportation is purchased. Here’s a breakdown of the rebate by date:
Beginning July 1st, 2022, a $4,000 rebate for the purchase of an electric vehicle.
Beginning July 1st, 2026, a $2,000 rebate for the purchase of an electric vehicle.
Beginning July 1st, 2028, a $1,500 rebate for the purchase of an electric vehicle.
Beginning July 1st, 2022, a $1,500 rebate for the purchase of an electric motorcycle.
Additionally, there are some requirements from the state:
The rebate cannot be more than the overall purchase price.
The purchaser must own the vehicle for 12 consecutive months immediately following the purchase.
The purchaser can only receive one rebate in 10 years.
Federal Tax Credit The state rebate isn’t the only rebate available to electric vehicle owners. An established Plug-In Electric Drive Vehicle Federal Tax Credit (IRC 30D) of up to $7,500 is also available to taxpayers. This federal tax credit was recently extended as part of the Inflation Reduction Act. But there are new eligibility factors for both the purchaser and the manufacturer. Most of the changes to this credit impact taxpayers purchasing an electric vehicle in 2023. However, there are manufacturer requirements that went into effect when the law was signed in August. We have all of the details on the Inflation Reduction Act here.
Overall, if you are considering purchasing an electric vehicle and are weighing your options, it is worth looking into the potential state rebates and federal tax credits. Depending on your tax situation, it may make sense to purchase in 2022 if you do not meet the 2023 eligibility requirements. And the reverse, depending on the vehicle you’re looking to purchase, it may make sense to wait to buy until 2023.
Shelly Casella-Dercole joined the firm in 1998, and her name went on the door in 1999. She now serves as the Managing Partner of the firm. "As a business owner myself, I understand the complexities and challenges business owners face, and I strive to add value by helping clients understand their financial statements, manage tax consequences, and clearly see the financial and tax ramifications — both positive and negative — of decisions they make," she explains. "Without good financial information, it’s like driving a car blind, but with good information, clients are able to maximize profits."