by Ileagh MacIvers
The Inflation Reduction Act, or IRA, was signed into law in August 2022 by President Biden, making it the “most significant action Congress has taken on clean energy and climate change in the nation’s history.” The climate investments in the IRA are historic and act as a critical first step towards addressing the urgent moral issue of climate change. The IRA aims to cut American greenhouse gas emissions up to 44% by 2030, while saving thousands of lives, creating millions of good-paying clean energy jobs, and investing in environmental justice.
The IRA provides over $10 billion in rebates and tax credits to help individuals, households, and nonprofits like houses of worship install important upgrades and increase energy efficiency and renewable energy usage. Some of the tax credits in the IRA include those for wind and solar energy, efficiency upgrades, heat pumps, and electric vehicles for both individuals and houses of worship. While there has been significant reporting about clean vehicle tax credit for individuals, less is known about the opportunities for nonprofits. This blog post will help break down EV tax credits and rebates to help you and your house of worship make the most of this landmark opportunity to invest in clean transportation.
EV Tax Credits for Individuals
The EV tax credit for individuals, known within the IRS tax code as Section 30D, allows qualifying electric vehicle, plug-in hybrid vehicle, and fuel cell vehicle purchases to receive up to a $7,500 rebate. This rebate was updated in April 2023, splitting the $7,500 rebate into two rebates: $3,750 of the new credit is based upon the vehicle having at least 40% of its battery’s critical minerals sourced from the United States or countries with a free trade agreement with the US. The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US. These requirements will get stricter over time until 2032, when the current tax credit expires. In addition, vehicles must have an MSRP below $80,000 for an SUV or pickup truck and $55,000 for a sedan or hatchback. In order for an individual or household purchaser to qualify, your modified adjusted gross income (AGI) may not exceed: $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers.
There is also a credit for used electric vehicles. To quality, used EVs and plug-in hybrids must have a sale price of $25,000 or less, have a model year at least two years earlier than the calendar year when you buy it, and be bought from a dealer. Also important to note is that used EVs only qualify for the tax credit once in their lifetime. In addition, there are different income guidelines: your modified adjusted gross income (AGI) may not exceed $150,000 for married filing jointly or a surviving spouse, $112,500 for heads of households, or $75,000 for all other filers. Click here to access a full list of all the EVs and plug-in hybrids that qualify for the current tax credits.
EV Incentives for Houses of Worship
There are also two different EV opportunities for nonprofit organizations, including houses of worship, which can receive clean energy-related tax credits through elective pay, also called direct pay. The first credit, known as the 45W Commercial Clean Vehicles Credit, allows tax-exempt organizations that buy a qualified commercial clean vehicle to qualify for a clean vehicle tax credit of up to $7,500 for a light-duty electric vehicle and up to $40,000 back for a medium-heavy-duty vehicle. There is no limit on the number of credits an organization can claim. The other credit, known as the 30C Alternative Fuel Vehicle Refueling Property Credit, pays 6% of the price of electric vehicle charging infrastructure installed in low-income and non-urban areas. The credit can increase to 30% if certain prevailing wage and apprenticeship requirements are met, not to exceed $100,000. Since houses of worship are tax-exempt and do not have a tax burden to deduct the credit from, they will receive both of these credits in the form of a rebate. Guidance for these credits is still in process, with in-depth guidelines likely available later this year.
Are you adding an EV charging station at your House of Worship or purchasing an EV? Tell us about it! Submit your story here. We’ll use your story to help inspire other houses of worship to follow your lead and to report back to Congress about the importance of these programs.
These tax credits and rebates are a historic opportunity for our communities and congregations to invest in clean transportation. We no longer have time to wait to address the climate crisis, which is fueled in part by dirty, polluting fossil fuels often used in vehicles. The IRA has put our nation on the path to zero-emissions transportation, and we as people of faith and conscience have a moral opportunity to use these moments to work for environmental justice and equity in implementation for the sake of our communities and Sacred Earth. We need your support – learn more about IPL’s work to instate robust national clean car standards here, and click here to access our library of past EV webinars.