In mid-January 2023, the US Department of the Treasury and the IRS disclosed new guidelines outlining the qualifications of electric vehicles eligible for the Federal EV tax credit. At the time, the Cadillac Lyriq was excluded from this qualification, because its classification as a passenger vehicle, not a utility vehicle, made it ineligible for the tax credit. Now, after a strong backlash from automakers and consumers alike, the Treasury Department has released an updated classification, which means Lyriq buyers will be able to take advantage of a $7,500 tax credit.
On February 3rd, 2023, the Treasury Department released a statement outlining its new standard for Federal EV tax credits, which it uses to determine the MSRP EV limits for tax credits provided as part of the Inflation Reduction Act. Now, the Department of Finance will follow the EPA’s Fuel Economy Labeling Standard rather than the previously used EPA CAFE rating.
“These changes will allow crossover vehicles with similar features to be treated consistently,” said a statement from the Department of Finance. “It will also align vehicle classifications under clean vehicle credit with the classifications shown on vehicle labels and on the FuelEconomy.gov website.”
As per CAFE’s previous EPA rating, the Treasury Department considered the Cadillac Lyriq a “passenger vehicle,” meaning that it had to retail for up to $55,000 to qualify for the tax credit benefits. The Lyriq’s starting MSRP is $59,990 for the 2023 model year and $58,590 for the newly found base Tech trim. The new classification guidelines, however, allow Lyriq to now qualify for the tax credit.
Customers who qualify for credit under the new EPA Fuel Economy Labeling classification standard, who purchased and placed service vehicles since January 1st, 2023 , and who also meet all other relevant requirements, can now claim credit. All vehicles that qualified under the MSRP limits in effect prior to the updated standard remain eligible.
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