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Kia is among some of the industry’s leading brands that have spoken out about the new sourcing and meeting needs of the Inflation Reduction Act (IRA). Signed by President Biden last year, the IRA is a major climate, energy and fitness initiative. and tax law that also revealed a tax credit for electric vehicles.
To stimulate domestic production of electric cars,” the inflation relief act requires that the final meeting of so-called “white cars” be held in North America, in order for those electric cars to qualify for EV tax credits. The final meeting you want to enter will go into effect on August 16, 2022. There is a similar requirement in the Inflation Relief Act, that minerals and other key parts (i. e. battery parts), which are used to make electric cars, also basically come from North America in the North America – Year Year 2026.
South Korea has been vocal in its belief that the new EV tax credit requirements mean that many EVs, including those made by Hyundai and Kia, won’t qualify for the electric vehicle tax credit. To address those concerns, South Korean President, Yoon Suk-yeol, has met with President Biden to discuss the impact of the new EV manufacturing and sourcing requirements.
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In September 2022, Vice President Kamala Harris also met with South Korea’s prime minister, Han Duck-soo. Both sides expressed a desire to work together throughout the implementation of the Inflation Reduction Acts’ electric vehicle tax credit provisions, which is ongoing at Treasury and the IRS.
Meanwhile, in late 2022, U. S. Sen. Rev. Raphael Warnock (D-Ga. ) encouraged the Biden administration to be flexible in implementing EV tax credit reforms. The Georgia senator proposed the Affordable Electric Vehicle for America Act, which would create an era of phasing in EV sourcing and production needs to reduce inflation.
EV tax credits explained: what he has and what awaits us
The concept is that if automakers are given more time to comply with new vehicle requirements, more car buyers will qualify for the 7,500 EV tax credit.
Hyundai is set to begin construction this year on an EV auto manufacturing plant in Georgia. The multi-billion-dollar investment, which was announced in May 2022, is significant and could be directly impacted by the new electric vehicle tax credit requirements in the Inflation Reduction Act.
When proposing the Affordable Electric Vehicle Law for the United States, Warnock said that in addition to wanting more time to meet the lascocalization requirements, Georgia’s automobile manufacturers want more time to put online the commodities planned for national electric vehicles. The Hyundai plant is expected to open in 2025 in Bryan County. , Georgia.
At this time, what, if anything will ever happen with Warnock’s bill. In the meantime, the Inflation Reduction Act’s requirements for sourcing and manufacturing electric vehicles in North America will be implemented in accordance with the law as enacted. The IRS expects to release that guidance in March.
Meanwhile, major automakers in the EV industry, whose EVs are sourced primarily in North America lately, are likely to move some of their production to the U. S. , so their cars can qualify for the new EV tax credit.
The Inflation Reduction Act and Taxes: What You Need to Know
So what can you do? Well, if you’re in favor of the Kia Niro, Kia Ev6, or Hyundai Ioniq5 electric cars, for example, check to see if anything matches the origin and manufacture of Kia or Hyundai electric cars. Keep an eye on the existing list from the Ministry of Energy whose cars are eligible for the new EV tax credit, too.
And, for more details on the new Electric Vehicle Tax Credit and the Inflation Reduction Act, see Electric Vehicle Tax Credit Explained: What’s Changed and What’s Next.
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As a senior tax editor on Kiplinger. com, Kelley R. Taylor simplifies federal and state fiscal information, news and advances to empower readers. Kelley has more than two decades to delight in advising and covering education, law, finance and taxes as corporate lawyer and business journalist.