There is some strange vehicle classification going on in the depths of the Internal Revenue Service (IRS). In short, the US Government probably doesn’t feel the same about your Ford Escape or Cadillac Lyriq as you do. And if you’re looking to buy Lyriq, it can be an expensive difference.
This was recently revealed with a new $7,500 EV tax credit for 2023, available on select electric and hybrid vehicles. Of course, restrictions apply and what matters most is whether you drive an SUV, truck, van or “other” vehicle. That’s because SUVs and the like must have an MSRP of $80,000 or less to qualify. Meanwhile, the others have a much lower $55,000 MSRP cap.
Read carefully IRS website and you’ll find a lot of information about tax credits, including a list of eligible vehicles. The IRS also lists the MSRP limits that apply to each model, which conveniently reveals how the FBI categorizes them. It shouldn’t surprise you that the Jeep Grand Cherokee 4xe is an SUV, the Ford F-150 Lightning is a truck, and the Nissan Leaf is, um, other.
But things just aren’t that dry with some models which should be a no-brainer. The Ford Escape PHEV is listed with a $55,000 floor cap, although it’s an SUV in almost everyone’s eyes. Lincoln Corsair was also considered other, but Chrysler Pacifica has an $80,000 SUV limit. The VW ID.4 lives in both worlds according to Uncle Sam depending on whether it is equipped with all-wheel drive. Even stranger is the Tesla Model Y – classified as a seven-seater SUV but other with a five-passenger trim.
For most, classification doesn’t really matter but you have the Cadillac Lyriq. It is referred to as an SUV; it has a general shape and a higher ride height than an SUV. But the IRS doesn’t consider it an SUV, and is therefore subject to a $55,000 MSRP cap. Meanwhile, Lyriq starts at $60,000, excluding the insignificant tax cut on what looks like a technicality. Cadillac is clearly not too happy about this. A spokesperson for the company told Reuters that concern about vehicle classification was brought to the US Treasury Department.
Among his concerns is the fact that the US Environmental Protection Agency – another legal US entity – classify the Lyriq as an SUV.
