Add Yours: 2023 Toyota bZ4X Owner's Registry

With a <8/16/22 binding contract, if one took delivery of a BZ4X on 1/1/2023, which tax credit would apply: $3,750 or $7,500?

3614 Views 21 Replies 9 Participants Last post by rubjan3, 4 d ago

B.Wilkins_85

Discussion Starter · 6 mo ago

And what if one were to take delivery today, in December of 2022? With a pre-8/16/22 binding contract in hand—$3,750 or $7,500?

There’s been a lot of speculation—and a great lack of clarity—about how exactly the tax credit phase-out for Toyota [reducing maximum tax credit for their EV’s to $3,750 as of 10/1/22] would actually apply to BZ4X’s with binding contracts dated prior to 8/16, but with actual delivery only occurring now, or in the coming weeks.

Despite the new legislation/"Inflation Reduction Act" EV stipulations, it seems that under the IRS’s “transition rule” (Plug-in Electric Drive Vehicle Credit Section 30D | Internal Revenue Service), for tax purposes, the rules that will apply to those who already had binding contracts on undelivered but qualifying vehicles will be as if the car had been sold prior to enactment of the bill (on August 16th).

If this is their full interpretation, then the entire $7,500 credit is surely on the table, as the first tax credit phase-out for Toyota had not concluded at that time, with the phase-out having actually concluded on 10/1/22:

Credits for New Electric Vehicles Purchased in 2022 or Before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

Although in the above link, the IRS’s use of the word ‘acquired’ [date] on their qualifying vehicles muddles things; what does 'acquired' actually mean within this context, and in the broader context of the transition rule?

Hence the consideration that if for the purposes of the phase-out only, the IRS decides to go with the actual physical acquisition date of the vehicle, then the tax credit phase-out for Toyota would indeed apply (and for only a couple of months a for only a few very unlucky people). That said, it would be very illogical if the IRS followed their ‘transition rule’ in this instance for the North American assembly requirements in the bill, but ignored it in the case of the phase-out rules (of course complicated by the fact that there is an awkward 4-month gap in the implementation of the new phase-out rules).

However, if they did in fact interpret the two aspects of rebate qualification as mutually exclusive, then would taking delivery after 12/31/2022 be the safest bet—assuming a BZ4X under pre-8/16 binding contract—since it would result in a delivery/purchase/'acquisition' date at a time when all phase-outs had been reset (i.e., manufacturer production phase-outs are to be eliminated/reset under the new legislation, commencing 1/1/2023).

Does anyone have any current insights?

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