Cadillac Lyriq Tax Credit Eligibility

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As of January 1st, 2023, the Cadillac Lyriq does not qualify for a federal tax credit. However, this is subject to change in the future. 
Whatever your personal feelings about electric vehicles (EVs), one thing is clear: they’re here to stay. More people are abandoning gas pumps in favor of
charging stations
. The reasons for this aren’t only environmental—they’re also financial. The federal government offers consumers a tax credit on some EVs, and who doesn’t want to save some money come April? 
But in the world of taxes and credits, the question of who qualifies and who doesn’t is a confusing one. We’re here to help you navigate it in the case of the Cadillac Lyriq and to offer alternatives if the Lyriq isn’t the one for you. Let’s walk through it. 

Is the Cadillac Lyriq eligible for a federal tax credit?

Because the Cadillac Lyriq was not classified as an SUV by the government, it is not eligible for a federal tax credit as of January 1st, 2023.
Created as a concept in 2020 and officially debuted in 2021, the Cadillac Lyriq doesn’t have a long history—at least, not as long as the EV federal tax credit’s past. The government has been encouraging the sale of EVs since 2009 by offering a tax incentive of up to $7,500
As with all things, there are strings attached. Manufacturers have to meet several requirements for their
vehicles to qualify for the tax credit
. To make matters even more confusing, those requirements were revised on January 1st, 2023
The main rule we’re concerned with for the Cadillac Lyriq is the cap on the retail price. A vehicle can only qualify for the incentive if its MSRP obeys certain restrictions, including: 
  • SUVs, vans, and pickup trucks cannot have an MSRP exceeding $80,000
  • Cars and other passenger vehicles cannot have an MSRP exceeding $55,000
GM classifies its Cadillac Lyric as an SUV and has given it a starting MSRP of $59,990—well under the $80,000 retail cap. There’s just one problem: the federal government classified it as a regular passenger vehicle. That means it exceeds the $55,000 price ceiling and cannot meet the specifications for a federal tax credit. 
GM is appealing the classification, but purchasing a Cadillac Lyriq will not currently qualify you for the tax credit. 
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What you should know about the new federal EV tax credit requirements

There is a bevy of requirements before someone can expect to receive a tax credit for an electric vehicle. The price cap problem stands in the Cadillac Lyriq’s way, but let’s take a look at some of the other qualifications at hand. This way, you can have all the information before deciding which vehicle to buy. 
To start, there are income limits. Your adjusted gross income can’t be greater than: 
  • $300,000 if married filing jointly
  • $225,000 if head of household
  • $150,000 if filing in any other category
You can’t intend to resell the vehicle, and you must primarily use it in the United States. You must also buy it new—used vehicles won’t qualify.  
These are just the restrictions placed on individuals. Manufacturers have their own set of criteria they have to meet, and the MSRP is just one of them. EV producers must also take into account these rules: 
  • The battery must have a capacity of at least 7 kW hours
  • The vehicle must have a gross vehicle weight rating below 14,000 pounds
  • The final assembly must take place in North America.
Previously, manufacturers were only allowed to produce 200,000 units that could qualify for the credit. Most recently, this restriction was lifted by President Biden’s Inflation Reduction Act. The act also cemented the current list of qualifications until 2032. 
Another restriction technically exists but is not currently being enforced: 50% of the battery’s components must come from North America or countries with a standing free trade agreement with the US. As of yet, no EV currently meets this standard—thus, no EV or plug-in hybrid electric vehicle (PHEV) would satisfy all the requirements for the federal tax credit. Because of this, the government decided not to enforce this rule until later in 2023.

Other electric vehicle incentives

You wouldn’t be alone in thinking that all sounds like a lot of hoops to jump through for a maximum of $7,500. That’s why the federal government isn’t the only institution implementing incentives to buy EVs.
Electric companies in
Alabama
,
Alaska
,
Connecticut
,
Iowa
, and more offer discounts on electric bills when people purchase an EV or PHEV. 
Kansas
,
Louisiana
,
Maine
,
Mississippi
, and other states offer rebates on the vehicles
Some states provide a plethora of incentives, like
California
,
New York
,
Oregon
, and
West Virginia
If you don’t see your state on this list, check out
Kelley Blue Book’s comprehensive guide
to find out which incentives you can take advantage of.   

Is the Cadillac Lyriq still worth buying?

Supposing the government doesn’t relent and classify the Lyriq as an SUV so it can qualify for the tax credit, is it a vehicle worth buying? Unless you value form over function, probably not
Keep in mind that this is Cadillac’s first attempt at an electric SUV—there are bound to be some kinks that will get worked out in upcoming model years. As it stands, however, the Lyriq is a machine of luxury, not performance. The suspension, acceleration, and handling are all adequate but nothing to write home about—and they don’t hold a candle to rivals like the
Tesla Model X
or the BMW iX. 
You’ll get an estimated 312 miles per charge, and you are equally capable of using DC fast charging stations and at-home charging stations with GM’s scalable battery technology. The mileage is impressive compared to the
Audi E-Tron
or Jaguar I-Pace, but again—the Lyriq falls short of the Model X’s highs (348 miles!). 
What you’d buy the Lyriq for are the interior features. It boasts a massive 33-inch LED touchscreen that holds both the infotainment options and standard gauge displays. Even the base model includes Apple Carplay and Android Auto, along with a 19-speaker AKG sound system to blast your tunes with. Also on offer is a WiFi hotspot and a quiet ride thanks to superior noise cancellation technology. 
If you’re looking for a relatively budget version of an electric SUV and don’t care much about having a fantastic ride, the 2023 Cadillac Lyriq is an option. But if your values lie elsewhere, take a look at our list below of some alternatives.    
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What to buy instead of a Cadillac Lyriq

Whether it’s the lack of a federal tax credit or just the vehicle itself that turns you away from the Cadillac Lyriq, you will not be left without options. Most manufacturers are focusing on SUVs these days, and nearly all of them offer an electric or hybrid version. If they don’t yet, they probably will soon. 
What can you buy if you’re looking to stay in the electric scene? Here’s what we suggest. 

If you have money to spare: the 2023 Rivian R1S

Starting MSRP: $75,000
The 2023
Rivian R1S
costs a bundle, but if you want an SUV that truly delivers on sports-utility capabilities, you don’t have to look any further than this. You can adjust the suspension to get up to 15 inches of
ground clearance
, and it handles well off-road—not something that can be said for many EVs! 
It comes with a standard battery pack offering 260 miles, but if you don’t want to risk getting stranded off the beaten path, you can upgrade to a large battery with a 316-mile range. Other features include an 835-hp Quad-Motor that delivers acceleration from zero to 60 in just 3.1 seconds and all-wheel drive. 

If you really want the federal tax credit: the 2023 Nissan LEAF

Starting MSRP: $29,135
Available tax credit: up to $7,500
Talk about a budget option! The 2023
Nissan LEAF
not only comes in at a stunningly low retail price, but it also remains eligible for the tax credit. Unfortunately, you get a severely reduced bang for your budget buck. 
With a driving range of around just 200 miles, you’re going to be charging up a lot, and the best available motor tops out at a mere 214 horsepower. In better news, the infotainment system is intuitive and easy to use. The storage capacity is competitive for its class and the interior is comfortable. Overall, it might not be the best choice, but it provides an astoundingly low barrier to entry in terms of price.

If you’re not ready to go fully electric: the 2023 Ford Escape PHEV

Starting MSRP: $39,995
Available tax credit: up to $7,500
The 2023
Ford Escape PHEV
is another model lower on the price list, but it has the advantage of still being environmentally conscious while not relying solely on charging stations. It comes with a continuously variable transmission and an engine that generates 210 horsepower. 
While it only has 37 miles of electric-only driving range, it impresses with 44 mpg city. Also notable are its expansive storage space and automatic software updates. 
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By Alita Dark
Insurance Writer
Updated on Jan 20, 2023
Reviewed by Kaitlin May.
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