The Volvo XC60 Recharge plug-in hybrid electric vehicle (PHEV) no longer qualifies for a federal tax credit as of January 3, 2023, because its starting MSRP exceeds the maximum price cap.
Since 2010, many EV buyers have been eligible for US federal tax credits ranging from $2,500 to $7,500. Prior to the Inflation Reduction Act, which disqualifies vehicles with certain base MSRPs, Volvo's V60 Recharge and XC60 Recharge models were eligible for this credit.
Here, we'll discuss the benefits and drawbacks of purchasing the Volvo XC60 Recharge today (without the tax credit), then look at some excellent alternative PHEVs and electric SUVs.
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Is the Volvo XC60 Recharge still eligible for federal tax credit?
No. As of January 3, 2023, the Volvo XC60 Recharge no longer qualifies for any federal tax credits from the IRS.
The US government began offering a $7,500 tax credit for electric vehicles, plug-in hybrids, and fuel-cell electric vehicles in 2010. If you bought one of these cars on or before August 16, 2022, it might have
qualified for the tax creditas long as the manufacturer hasn't reached a sales cap.
In order to qualify for a tax credit today, hybrids and EVs must now meet new criteria that were implemented when the Inflation Reduction Act was signed in August 2022.
Additional eligibility requirementsgo into effect in 2023.
If you bought an electric vehicle (EV) after August 16, 2022, and had it in your possession before the new year, you can only get the tax credit if the vehicle's final assembly was in North America and its MSRP is below a certain price point.
Unfortunately, the Volvo XC60 Recharge currently does not meet this requirement because it exceeds the MSRP threshold.
But that doesn’t mean all Volvo models are ineligible! The 2022 Volvo S60 Recharge (Extended Range) and the 2023 S60 T8 Recharge (Extended Range) are both eligible for the full tax credit.
The entire list of vehicles that fit these manufacturing and price criteria can be seen on the
Alternative Fuels Data Center website. You can also enter a vehicle identification number (VIN) to find out where that particular car was manufactured.
What you should know about the new federal EV tax credit requirements
As of 2023 and at least until 2032 (when the new credit expires), low-emissions vehicles must meet a number of new requirements to qualify for a tax credit. Let’s go over them.
To begin, your income will be considered. To be eligible for the tax credit, single drivers cannot earn more than $150,000 per year, while married couples filing jointly cannot earn more than $300,000.
The type of car and its list price also matter. Sedans must have a list price of less than $55,000, while larger vehicles such as trucks, vans, and SUVs must have a list price of no more than $80,000. Each of the 2023 Volvo XC60 Recharge’s
trim leveloptions ($58,295+) fall above this, making the entire lineup ineligible.
Used cars will also be eligible. In this case, you can get a tax credit of up to $4,000. To qualify, the list price of a used EV or plug-in hybrid must cost less than $25,000. Income limits are set at $75,000 for single filers and $150,000 for married couples filing jointly.
For the time being, one of the most difficult hurdles to jump for manufacturers will be battery construction requirements. The components of a battery pack must originate in either North America or a country designated as a free-trade partner by the United States. From there, the battery packs themselves must be assembled in North America.
Other electric vehicle incentives
Even if this seems like a lot to take in, remember that there are other incentives and rebates you can take advantage of even if you won’t receive a federal tax break. Many states, local governments, and utility companies have created incentives for installing a home charging system, for instance.
Research local incentive programs to find out what you are eligible for. For example,
California’s electric vehicle incentivesoffer rebates of up to $7,000 for the purchase of an EV.
Florida's incentives for electric vehiclesare only available through regional power authorities. Customers of the Kissimmee Utility Authority can get a $100 rebate, while customers of the Jacksonville Electric Authority can get tax credits of up to $7,500.
Is the Volvo XC60 Recharge still worth buying?
With all of this in mind, is it still worth buying a Volvo XC60 Recharge? Maybe.
Like all Volvo vehicles, the XC60 Recharge combines eco-friendly efficiency with cutting-edge driver assistance and safety technologies. When you take into account the XC60's spacious cabin and flexible engine lineup, it's easy to see why Car and Driver gave it a 9/10 rating and why Edmunds ranked it as the best luxury plug-in SUV for 2023.
With a 2.0L turbocharged four-cylinder engine, plus an 18.8 kWh battery and electric motors, the combined power output is a mighty 455 horsepower and a fantastic 523 lb-ft of torque.
The biggest difference from last year is the size of the battery, which was 11.6 kWh. This makes the electric range go up to 58 km, depending on how you drive, the weather, the weight of the car, and how much power you use inside the car for things like the HVAC, heated seats, heated steering wheel, etc.
Overall, the Volvo XC60 Recharge is still a good option. However, if you're only considering the XC60 Recharge because of the tax credit or if your budget doesn't quite reach the $58,000 necessary to make the purchase, you may want to evaluate all your options.
What to buy instead of a Volvo XC60 Recharge
Not completely sold on the Volvo XC60 Recharge? There are now more electric and plug-in hybrid options than ever before, so you have lots of options to consider.
If you really want the federal tax credit: 2023 Ford Escape PHEV
Starting price: $33,340
Possible tax credit: $7,500
The Ford Escape receives a major revamp for 2023, with a new front and rear look, updated headlights and taillights, and Ford's new Sync 4 infotainment system. Additionally, the entire model line is updated with new trim levels, engines, and features. The EPA estimates that the plug-in hybrid model can travel 37 miles solely on electric power from its 11.2-kWh battery pack.
While the Escape receives favorable reviews from experts, it lacks an all-wheel drive option, putting it slightly behind some other plug-in SUVs in popularity.
If you just want a great luxury PHEV: 2023 Audi Q5
Starting price: $44,200
Possible tax credit: $7,500
Though the Audi Q5 isn't cheap, you might be able to reduce your initial investment by taking advantage of the available tax credits. The Q5 slots in between Audi's smaller Q3 and the larger, three-row Q7, and it features the brand's usual hallmarks, including a high-quality cabin design, standard all-wheel drive, and an abundance of technological amenities.
The 2023 model is anticipated to have an EPA-estimated electric range of 23 miles, a combined range of 390 miles, and a combined fuel economy of 61 MPGe (electric + gasoline)/26 MPG (gasoline).
If you’re looking to go all-electric: 2022 Hyundai Ioniq 5
Starting price: $41,245
Maximum range: 303 miles
If you're ready to go all-electric, there's the Hyundai Ioniq 5, a sleek all-electric SUV that's less expensive than the XC60 Recharge and won Car and Driver's 2022 EV of the Year award.
The Ioniq 5 does not qualify for tax credits, but it is a surprisingly affordable electric SUV with excellent specs, including charging speeds of up to 350 kW with DC fast chargers, a max driving range of 303 miles, and up to 320 horsepower depending on engine configuration.
It is designed to stand out on the roads, both in terms of modern design and naturally exceptional performance.
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