Hyundai Ioniq 5 Tax Credit Eligibility
Although the Hyundai Ioniq 5 used to qualify for the $7,500 tax credit, a new bill has made it ineligible. Here are the details.
Thanks to the Inflation Reduction Act of August 16, 2022, the Hyundai Ioniq 5 is no longer eligible for a federal tax credit.
If you were counting on the
federal electric vehicle tax incentive
to help offset the cost of your new Hyundai Ioniq 5, you’re unfortunately out of luck. Even though the Ioniq 5 was previously eligible for a $7,500 tax credit, the recently passed Inflation Reduction Act has removed EVs assembled outside of North America from the program. Even though the Hyundai Ioniq 5 won’t be eligible for a tax credit, it’s still an EV worth checking out. We’ll discuss the advantages and disadvantages of buying the Ioniq 5 without the tax credit and consider some alternatives.
Is the Hyundai Ioniq 5 still eligible for a federal tax credit?
Unfortunately, the Hyundai Ioniq 5 is no longer eligible for federal tax credits thanks to the new electric vehicle eligibility rules set out in the Inflation Reduction Act.
What is the federal tax credit anyway? Started in 2010, an EV tax credit was introduced to make buying an electric or plug-in hybrid vehicle more accessible for the everyday consumer. Each manufacturer had a cap of 200,000 EVs—GM and
Tesla
have both already met that cap, meaning their vehicles are no longer eligible.But this isn’t the case for
Hyundai
. The reason the Ioniq 5 is no longer on the list of eligible vehicles is because of where the model is manufactured—at Hyundai’s Ulsan plant in South Korea. The Inflation Reduction Act of 2022 limits the EV tax credit to vehicles that are assembled in North America and have a battery with materials sourced from America’s free trade partners.There has been a fair amount of pushback to this bill, as Hyundai is dedicated to its American market and has invested $5.5 billion in a plant in Georgia that will produce batteries and EVs. Time will tell if an agreement will be made to put the Ioniq 5 back on the list of eligible EVs.
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What you should know about the new federal EV tax credit requirements
Electric vehicles assembled in North America have more hoops to jump through in order to be eligible for the new federal EV tax credit.
For one thing, a buyer’s income now factors into which vehicle purchases qualify for the tax credit. Car buyers are only eligible if they make under $150,000 a year, or $300,000 annually if they file taxes with a spouse or partner.
Starting in 2023, the price tag of an EV will also come into play. Sedans under $55,000 will qualify for tax credits, while larger vehicles will need to sell for under $80,000. When it comes to used vehicles, there is a price cap of $25,000, regardless of the car’s body type.
If automakers want to build an EV that is eligible for the tax credit, they’ll also have to adhere to the new battery materials restrictions. Going forward, EV batteries will have to contain a certain percentage of materials sourced from North America or a U.S. free-trade partner—plus, the battery has to be made in North America. There are currently no EVs that match these requirements.
Other electric vehicle incentives
Before you give up hope of recovering some of your investment through an EV tax credit, remember that there are other state incentives and rebates for electric vehicles and plug-in hybrids. Some of these programs will provide a rebate if you purchase an EV or will help with the cost of installing or upgrading a home charger.
You’ll need to do a bit of research to find out what rebates and incentives are available in your state.
California’s electric vehicle incentives
include rebates up to $7,000 while Florida’s electric vehicle incentives
provide a $100 utility rebate and tax credits up to $7,500. You may be surprised at the EV incentives you can qualify for!Is the Hyundai Ioniq 5 still worth buying?
Since the Ioniq 5 isn’t eligible for the federal tax credit, you may be wondering if it’s worth looking elsewhere for a more affordable EV.
The Ioniq 5 is undoubtedly an excellent EV crossover option. Car and Driver awarded it an Editors’ Choice accolade and named it the #1 EV of the Year for the 2022 model. Between its quick charging time,
303-mile maximum driving range
, and distinctive design, the Ioniq 5 gets you where you need to go, and looks good while doing it!With the
2022 Ioniq 5’s starting price
of $41,245 MSRP, this EV would be more accessible with a $7,500 tax credit, but considering the money you’ll save on gas and its highly-rated driving manners, you could do much worse.The Ioniq 5 is a top choice if you’re in the market for a new EV. But if the price tag is a little daunting, or even if you just want to cover all your options before heading to the dealership, here are some alternatives.
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What to buy instead of a Hyundai Ioniq 5
If you’re looking for an EV that will
still qualify for federal tax credits
, you’ll be looking at luxury vehicles, trucks, or SUVs. With a few options on the table, let’s consider the models that are the best alternatives for the Ioniq 5.If you really want the federal tax credit: 2022 Ford Mustang Mach-E
Starting price: $44,995
Possible tax credit: $7,500
The
Mustang Mach-E
is currently on the eligibility list for the federal EV tax credit. The Mach-E is a striking crossover with between 211 and 305 miles of range, depending on the battery pack and motors you choose. With this athletic EV, you’ll also get suave interior features like customizable ambient lighting, heated front seats, a heated steering wheel, wireless charging, and a panoramic sunroof.Even though it has a higher price tag than the Hyundai Ioniq 5, the tax credit can help offset the cost, leaving you to enjoy your sporty, sophisticated, and eco-friendly Mach-E.
If you just want a great EV: 2022 Kia EV6
Starting price: $42,695
The
Kia EV6
is the natural rival of the Hyundai Ioniq 5. Even though the two models share the same ride platform and electronic components, there are still some major differences. With a sleeker build, more in-cabin storage, and upscale features for a lower price point, the EV6 has a lot to offer.The Kia EV6 also gets slightly better range ratings:
- Rear-wheel drive with the standard battery: 232 miles
- All-wheel drive with the long-range battery: 274 miles
- Rear-wheel drive with the long-range battery: 310 miles
If you’re open to a plug-in hybrid: 2022 Toyota RAV4 Prime Plug-In Hybrid
Starting price: $30,910
Maximum range: 42 miles
Instead of going full EV, you may want to consider a plug-in hybrid like the
Toyota RAV4 Prime
. Not only is the price tag a little easier to swallow, but you’ll have more flexibility when it comes to how you want to power your SUV.Although Toyota EVs and plug-in hybrids are no longer available for the federal tax credit—having exceeded the eligibility cap—there’s still a lot to enjoy about the RAV4 Prime. It comes with Apple CarPlay, Android Auto, and an onboard Wi-Fi hotspot, plus standard safety features including lane-departure warning with lane-keeping assist and adaptive cruise control. You’ll also save tons on gas money with an EPA rating of 94 MPGe combined.
For a more affordable and spacious option, the RAV4 Prime should be on your radar.
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