Over 150,000 electric vehicles (EVs) purchased this year have received tax deductions under the Inflation Reduction Act (IRA) in the U.S., resulting in over a billion dollars in savings.
The U.S. Treasury announced this data on June 12, marking an important milestone in the Biden administration’s efforts to reduce transportation costs.
According to the U.S. Treasury, more than 150,000 EVs purchased since January 1 have received tax deduction benefits. Over 125,000 were new EVs, while the rest were used.
Under the IRA, the U.S. government provides a tax deduction of up to $7,500 for EVs assembled in North America. Used EVs can receive a deduction of up to $4,000. The U.S. government initially allowed consumers to receive tax deductions at the end of the year after purchasing a vehicle. However, to alleviate consumer inconvenience, the system was changed this year to allow discounts equivalent to the tax deduction amount at purchase.
The U.S. Treasury explained in a press release that 90% of new EV purchases and 80% of used EV purchases opted to receive discounts directly at the time of sale instead of future tax deductions.
Treasury Secretary Janet Yellen stated, “President Biden’s IRA has been reducing the cost of EV purchases for American consumers since January, along with over a billion dollars in prepaid cost savings. This discount expands consumer choice and creates new business opportunities to expand their customer base.”
Treasury Deputy Secretary Wally Adeyemo also told NBC, “Many people want to save immediately without waiting for tax filing. A billion dollars is a significant milestone.”
The Treasury announced that in 2023, a record high of 1.5 million clean vehicles, including EVs and hybrids, were sold annually. This is a 50% increase compared to 2022.
According to the Treasury’s analysis, EV owners save between $18,000 and $24,000 over 15 years of vehicle operation compared to owners of comparable gasoline vehicles. The Treasury explained that the biggest reason for this cost saving is fuel costs.