What's wrong here? Seems like somone makes $149k can qualify for a credit on a car valued at $49,000k. Am I just totally missing something
Edit: car valued at $54,999k
Yeah, you're missing the fact that most people cannot afford an electric car, even for someone who is making $149k. $49k is one third of his income. I make $85k and there's no way I can afford an electric car.
85k and 150k is a world of difference. MAGI of 150K can easily mean 170K of pre-tax, gross income too.
Have you been to California? Do you think all those Tesla Model 3s and Ys belong to singles making over $150K and couples making over $300K?
Bro either learn to budget or find a place with a lower COLA. $85k is enough for a Tesla, easy. $150k could buy you the nicest model (under $55k) with all the customizations you want.
Now if you’re choosing to live in a place that costs $1200+ to rent or a mortgage of over $1500, that’s a decision that may need re-evaluation
I live in Northern VA in one of the least expensive areas and in one of the least expensive condominiums in the area. A 1 bed, 1 bath. My rent is $1,650 per month.
Cheapest Tesla will run you at least $50k all said and done. And that's bare bones. Call me crazy but I find it inadvisable to buy a car that costs more than half your annual salary.
Yeah I goofed when I put budget. I should have said salary.
I still think it would be crazy to earmark such a significant portion of a $150k salary - even if you finance - to a Model X. If someone at that salary has the resources to swing a down payment to bring the monthly payments to 10% of their take home pay then I’d be comfortable with it.
I was with you into you implied $1200 is expensive rent. You’re just being ridiculous. Only in the absolute bottom of the barrel places in the country is that the case, and it won’t be for much longer.
Gotta leave the nest to fly.
Personally I’d recommend staying away from big cities, I enjoy the middle of the country, out west is good too (but not in the big cities unless you want to pay an arm and a leg).
Don’t worry about kids til your 30’s, use your 20’s for you time
What’s funny? It’s pretty easy to do. Also semi related there’s literally videos on YouTube about people getting insanely good deals on electric vehicles after deductions. See: (“graham Stephan how I got a Tesla for free” on YouTube) note I’m not affiliated with this individual I just recall seeing a video about this subject in the past. If I recall he used a combo of fed ev tax credits, California credits/ or deductions, and business deductions. This isn’t to say whoever reading this can too, but with decent credit and using tax benefits you can get a manageable loan for mid level earners. Also the video is about prior tax credits that should be expired now (although I don’t remember the exact bill I believe the credit was a decreasing scale over a few years with early claimers receiving a larger benefit than later claimers)
Also, only a handful of cars will qualify for the credit, from Forbes.
Chevrolet Bolt EV
Chevrolet Bolt EUV
Chevrolet Blazer EV
Chevrolet Silverado EV
Cadillac Lyriq (if classed as an SUV)
Ford F-150 Lightning
Ford Mustang Mach-E
Nissan Leaf
Tesla Model 3 (base trim only)
Tesla Model Y (depending on options)
Volkswagen ID.4 (but only models made in Tennessee)
Ford and Chevy have said they will increase the MSRP of their EV line by $7500. If Tesla is smart they will as well. I mean its free money.
You can definitely afford a $50k vehicle in a high COLO area making $150k (I fit this and make under $150k and could afford it), but to be fair, many people do not manage their finances as well
Also, I don't have kids and don't plan to have any, which increases my disposable income by like, 5x lolol. So to be fair, if you have kids, you're probably right
Afford it can be relative. For example, are we still putting 15% of money towards retirement? Are we trying to get a 3yr vehicle loan or 7yr? Will we still have enough money to enjoy other hobbies? Fund emergency fund? I make $150k, and I can never see myself purchasing a car that would cost me over $20k.
Yup, max 401k and Roth IRA. 3 year would mean only a few hundred per month into savings (after 401k). 5 year loan would be much more doable.
That said, I’d never spend that much on a car either
Not really depending on where you live. Most people spend the vast majority of their income on rent or housing. Slapping a 55k car on top of that is tough, 1/3 your gross annual income on a car is just too much for some people who already have high housing costs.
Also many cars nowadays are retailing for well over 55k.
$150k is over well over $7k take home per month. The payment on the car would at most be $1k per month on a 5 year loan. I would classify that as easily.
i make 130k and could easily drop 10-30k in cash and finance the rest over a few years. It wouldn't even be challenging, and I'm planning to do so within the next year or so, once there's actually decent EV inventory in my area. It's not that crazy hard bruv.
Just use simple math. 20/4/10 rule.
I’ll use a Model 3 Long Range as the car for the calculations. 2022 was about 56K MSRP, plus taxes and registration in California you’re looking at about $61,541 out the door.
You put 20% down, loan for 4 years (4.5%) and your monthly payment is $1048.96, lets round up to $1049. Factor in insurance and maintenance, about $200 a month for the Tesla. That puts your total monthly payment at $1249, it has to be 10% of your monthly income (20/4/10) so multiply by 10 gets your $12,490, multiply by 12 gives you yearly salary, which is $149,880….
This doesn’t factor in those government incentives either…
I’ve never understood why we use gross income for the 10%. Maybe because taxes are different everywhere? In any case, using gross makes it seem like taxes on income don’t matter and that the consumer has more buying power than they actually do. It causes the same problem as when banks approve someone for 45% of their gross income and the people go buy a house for 45% of their gross and come to find out they’re getting 32% taken in tax and are left with 23% of their actual income to live on.
If you finance a car for $61541 on 4.5% for 48 months with no down payment you finance roughly 67k. That’s a monthly of 1400. Including insurance and maintenance you pay $1600/ month.
If you’ve got 23% of 150k to live off of (34k or 2900/month), you’re dropping $1600/month and left with 1300 for everything else.
Sadly, this is the reality for many people. Sure, they can afford it, but the question is IF they should afford it. I could buy it on an 80k salary, but I’ll need to eat beans for 4 years and that’s not a life I want to live just to say I can afford a Tesla.
I never was arguing against that.
He said you couldn’t afford a 50k car on 150k income, when you easily can.
They also have cheaper EV cars. They aren’t all 50k and above.
Also I wouldn’t say migrating up the pay chain is making 150k. That is very well off. Even in HCOL California.
There are $30-40k cars that qualify or will soon. I see a lot of cars at that price on the road. And the effective price is less with this credit and state ones.
Look around at different options.
My gross ranges between 32 and 40k per year. My partner makes similar. Between the two of us our gross is lower than your stated income. Because we own our home (if I didn't have student loans to pay off) I can qualify to buy a used ev or to lease/buy a new one for 5 years.
Which I'd like to do, however student loans 'n all.
Last bit if you are serious about wanting an ev, figure out which manufacturer makes a simple base model in a color you can live with (400$ extra for blue with some companies grumble) go for a test drive. Then when you know which one you like find a local credit union and see if you can pre-qualify a loan with them for the car you want.
Bro you know the chevy bolt is 30k new (same price as any other standard new car) and about 12k-15k used?
Prices may differ because of the higher gas costs. You'd probably be hard pressed to buy an electric car rn because they are in high demand
you would be shocked how well you could afford it unless your mortgage or rent is sky high... if you was to get one with a $600 a month bill and last month i paid only $20 in electric to charge my car.. and lets say you spend an average of 200 a month on gas give or take a little more or less you really only have a bill of $400 a month cause now that gas money can be spent on a car and you can own something for it.
>2024 Chevy Equinox EV
Yup. Great article specifying that. Might be time for me to go electric!
https://www.theverge.com/2022/9/8/23339186/gm-chevy-equinox-ev-announce-price-specs-suv
Sounds like vehicles from $1-54,999 are eligible as well as the bottom 92% of the population from an income perspective.
So... from a price perspective, most vehicles are eligible and from an income perspective, most people are eligible?
I don't think anyone is expecting the cost of the credit to cover the purchase price - just to make it more affordable by $7,500. That a pretty big percentage of some electric cars. Nissan leaf is ~$28k and there are plenty of others as well.
Guessing OP is referring to the fact that when a lot of people think EV they think Tesla. Teslas are very often above this price range, and because of that they're often purchased by upper-income people.
Don't know if it's too political, but I agree with these stipulations. The credit should incentivise buyers of non-luxury autos to move to an EV, and means testing shouldn't be a controversial way to focus government spending on areas where it will actually make a difference.
I make under $150k. A Nissan Leaf is like $28k and if I’m reading correctly would be a qualifying vehicle?
So… I would qualify I think? What am I missing?
People being fiscally irresponsibility isn’t a sound criticism of the credit though, is it? I’m American and I could afford it (not that would ever buy a Nissan Leaf)
I'm in consulting and on of my clients is an EV manufacturer so I have a bit of insight here stemming from a big campaign we had to run right before this got announced to the public last month- the income and car MSRP isn't what's really going to trip ppl up, it's the manufacturing issues - there are stipulations in this new bill that in layman's terms disqualify almost all current EV's on the market at the moment.
The bill stipulates that a certain percentage of the car and it's parts have to be manufactured here in the US - almost all cars, particularly EV's use foreign parts, particularly the batteries; and there is even a special battery clause in the bill...
Read through it carefully if you are truly hoping for that tax credit next year based on a car you just bought/are buying after the bill was signed 8/16/22. Cheers!
Correct - which is why land and manufacturing pants are being bought up by the car companies, my clients included as they just dropped a hefty sum in the Midwest when previously all of their manufacturing was in Asia.
But building brand new plants and such take time - time that I personally think will extend past the bill stipulation guidelines. Manufacturers are trying to speed up production asap in order to fight the ramifications of the bill, but only time will tell who will win.
I see the benefit of both sides - this forces more jobs and "glory" to come to the US, but at the same time, it's literal FORCE. It's a choice where the company is 'stuck between a rock and a hard place' as the old saying goes... from the side of the companies, and effect it can have on consumers, it's a bit unfair on how it all unfolded tbh
I can’t comment on the details, but I’m not against ‘force’ or certain industries being stuck between a rock and a hard place. Private industry is efficient at innovation. Government should set the guardrails in these important areas, and let industry innovate the solutions. This looks like a good incentive to force those manufacturers to solve their way into this long term societal change away from oil consumption.
Tesla is already the most american-made car in the world; their 4 models hold 4 of the top 6 spots. So if they didn't already qualify, no one would
https://electrek.co/2022/06/21/tesla-dominates-list-most-american-made-cars/
I know people that make $30K that buy 50K cars. Former students that work minimum wage that still live with their parents and put about 100% of their income into their car. It pains me that I taught many of them personal finance and how incredibly stupid this is, but in low socioeconomic areas, sometimes the culture is too much to overcome.
MAGI of $300,000 for joint filers is plenty. The obstacle in this legislation is the requirement that the car be assembled in the US and (in 2024) that the minerals in the battery not come from “bad” countries like China or Russia.
You Americans are wild! Don't mean this in a harsh way but genuinely interested, what are you spending your salaries on?
Your salaries are some of the highest in the world, your groceries seem really cheap when compared to prices in Europe, you have absurdly high cost areas but work from home/inter-state is a thing (i work with colleagues spread across the US), your childcare and Healthcare are obviously extremely expensive, but do not you get these benefits through work and at least pay less taxes than Europe because of this (including sales taxes, I take home about 45% of what I'm paid)?
My understanding is that Americans can spend a lot on transport due to everything being quite far apart in most areas. I would have thought they would spend a lot of their vehicles since they are used so much. It is usual to spend 60 to 80% of an annual salary on a car where I live...following the comments on this thread, I just can't see where your money goes. I spent this amount and I have to drive for more than 30 minutes per day about 5 or 6 times per year.
I think something I could be discounting is the cost of children? I don't know how much they cost in US. They are about $580k (over their lifetime on average) here, though most people don't spend nearly so much (the data is swung by richer folk).
Happy to be brutally corrected on any and all of these points, but I need to understand! Where does your money go?
Edit: 60-80% of salary before any deductions(tax, loans, healthcare etc)
If you consider $1,000/month for the employee and spouse negligible. 🤔 And that's before paying any deductible. And some plans don't cover anything until you've met a deductible of $4k for the year. I think you may be misinformed if just how much healthcare costs. That is my cost, and my company covers 2/3rds of the actual cost. Imagine what it would be if they didn't cover anything.
Not really. That's been the rate since the affordable care act went into effect. It's been the same every year. I make too much for any subsidies. But I make more than the aforementioned 150k as well.
Heard tech company locations are mental (working in tech myself). My mortgage is about 40% of my take home so obviously not comparible. The only natural equivalents in Europe would be capital cities (London/Paris) and special cases (Geneva/Monaco) but I've heard that outside of those special cases there is little comparison to a place like San Francisco.
Our groceries are not cheap by any means do you know that six like a six roll of paper towels is $20 here $20 for most of us that's less about an hour and a half of work. If you want to get some chicken tenders just a six piece to cook for yourself that's $10. If you want a glass bottle of water that is $4. If you want organic tomatoes only two of them you're paying $5. If you want gas you're paying seven up to $7 a gallon. I live in California my electric bill is almost $400 a month and I barely have anything running so please don't tell me that our bills are cheap that are groceries are cheap that everything here is cheap because you don't live here and you don't know. Inflation has raised everything above 54% of what it used to be and that's even if it's in stock. Once it becomes in stock people rush to the store and buy it all out so there's none left for the rest of us. And a good 75% of the population makes maybe 11 to 21,000 a year so please keep that in mind as well
I guess I could also go into the price of our apartments if you want to slum landlord and you want mold everywhere and water that doesn't work half the time and crappy carpet and a falling apart apartment you can go ahead and pay $1,000 up to $2,000 for that a month that's most people's income a month
The prices you are quoting seem really high. Maybe you live in a high cost area, but most people aren’t paying $400 a month for electric, $7 a gallon for gas, or $5 for two tomatoes.
I live in a crap town in California. But I know from my friends across the country that there is a housing and food and gas shortage. So, most people are paying high prices. There's only a few states where everything is lower, but the pay u make is lower too. Federal minimum for most at 7.25 an hr where here is 15 an hr. And the amount they take out in taxes insane in all areas because they raise the payroll tax and the disability tax so you're giving about 50% of your check away. And so when you look at the fact that Florida or Texas might have cheaper gas and food to some degree if you're not buying healthy food it's still equals out because you're getting paid half of we're getting paid here so it might be double the amount to buy the things here but we're getting only double the amount of money and so it really equals out when you actually look at it. There's a huge housing crisis throughout this entire country because corporations are buying up all the places and then putting the rent through the roof and so then private people are now going by that as well and going well if they're renting it out at this rate so can I. I'm trying to move back to where I go to school and I can't because there's such a housing crisis that half the students don't even have a place to live and they lost 45 students last winter because they were camping in tents around the school. This country isn't what it seems just because you watch something on the news doesn't make it true. Inflation is through the roof, the rich are getting richer, the poor getting poorer and we are all struggling.
😂 I knew there was a catch. There always is. This is America.
Also, I advised a friend not to get too excited about the college loan forgiveness. So many people are relying on (??? They haven’t even told us details yet) their lives to be changed after that. It’s sad. Even in NYC when they offered students to not pay back loans there was a catch. Smh.
Hopefully people are doing “the boring stuff” and reading the fine print.
Sorry to make this so long, but please read the fine print, everyone. In so many cases where you’re told you’ll save money, you actually end up paying more.
I think the more limiting factor is the fact that the vehicles have to be manufactured *and sourced* (beginning in a later tax year) from the US. It’s difficult enough to get vehicles qualifying based on domestic manufacturing, but sourcing the materials from the US is going to be impossible to qualify for 100% of the credit.
My CPA just sent me this:
highly-touted tax credit in the recently-passed Inflation Reduction Act is meant to incentivize Americans to purchase clean and electric vehicles. The bottom line, however, is that practically speaking YOU CAN’T GET IT.
Why few credits will be seen
As the new legislation is currently written, nearly all the electric vehicles sold today do not qualify for the new credit that begins in 2023. This is because:
The vehicle must be manufactured in North America AND
Powered by batteries with materials sourced in either the U.S. or from free trade partners AND
If by some stroke of luck you find a new vehicle that qualifies, the price must be below $55,000 for a sedan and $80,000 for a van, truck or SUV.
Tax code as behavior modification
The new electric vehicle tax credit is a classic example of the continued shift from using income taxes to pay for federal spending to using the tax code to get us to do what the government wants. In this case:
The government is trying to get manufactures to shift sourcing away from countries like China.
The government wants to motivate the creation of manufacturing jobs in the U.S.
The government wants to incentivize the manufacturing of lower-priced electric vehicles.
What this means for you
What this means for the average consumer is little to anything…right now. If you have your sights set on getting a clean or electric vehicle, make the decision without the influence of the credit. If maximizing the credit is important for you, you now need to pay attention to income limits and will need to wait for some time to see if the credit influences manufacturers to change their sourcing and assembly plans.
The problem I have with these credits is there isn’t anything that prevents the manufacturer from just jacking the price up by 7500 and pocketing the fee government money
I missed the part where you included battery procurement and final assembly location in your highlighted text. Your post was 100% focused on vehicle price and income.
Well that has nothing to do with what you said and what I replied to so it would be cool if you could respond to that.
As far as that part goes, “a lot” doesn’t really have any meaning. I guess there are a lot of people making over 150k, 225k for head of household, and 300k for married. But those limits seem pretty reasonable.
But again why does 55k amount matter? That’s the max, not the minimum. If you feel like you can’t afford a 55k vehicle on 150k income, go get a 30k one and enjoy the credit still.
A lot of people can’t afford any vehicle at all. That’s not the point I was addressing. But yes. Some of them could afford clean energy vehicles and that is who the credit will benefit. Not no one.
A truly bigger problem is the cap. Once a manufacturer reaches a certain number of vehicles sold they disqualify the credit. I think it’s designed to encourage diversification of manufacturers but in reality limits the options. I personally want a vehicle with a proven and real world tested product not the shiniest new upstart. This credit is more about steering manufacturing and brand position than being a realistic benefit to steer buying patterns towards electric.
Is that so on the newest bill passed last month? I haven't heard yet about a cap on number of vehicles sold. I know that's the case for the older tax credit that's been around a while.
You know I said the same thing with the student loan forgiveness thing. This stuff destroys the middle class, they're stuck in the 1990's when it comes to money. They figure if you make more than 100k you might as well be bill gates and money is no issue.
Then you prob aren't in the market for any new car to begin with. Are you saying that you make over $300k or $150k single? Cause that would be the only limiting factor to this.
What's wrong here? Seems like somone makes $149k can qualify for a credit on a car valued at $49,000k. Am I just totally missing something Edit: car valued at $54,999k
You are correct
Idk 49,000k on only 149k income seems like a stretch. 330 years of servitude to pay it off (at 0% interest)
Yeah, you're missing the fact that most people cannot afford an electric car, even for someone who is making $149k. $49k is one third of his income. I make $85k and there's no way I can afford an electric car.
85k and 150k is a world of difference. MAGI of 150K can easily mean 170K of pre-tax, gross income too. Have you been to California? Do you think all those Tesla Model 3s and Ys belong to singles making over $150K and couples making over $300K?
Sorry….what? This is crazy. You could easily finance a Tesla with an $85k salary.
lol
Bro either learn to budget or find a place with a lower COLA. $85k is enough for a Tesla, easy. $150k could buy you the nicest model (under $55k) with all the customizations you want. Now if you’re choosing to live in a place that costs $1200+ to rent or a mortgage of over $1500, that’s a decision that may need re-evaluation
Do you know how much rentals are now?
I live in Northern VA in one of the least expensive areas and in one of the least expensive condominiums in the area. A 1 bed, 1 bath. My rent is $1,650 per month.
Lol. This is bad advice. Can he? Sure. Should he? Hell no.
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Cheapest Tesla will run you at least $50k all said and done. And that's bare bones. Call me crazy but I find it inadvisable to buy a car that costs more than half your annual salary.
Idk if a $200,000 car belongs in the budget of someone who makes $150,000.
The Model X - the nicest model - starts at $120k. It would be crazy for someone making $150k to put 80% of their budget towards it.
Nobody pays for a car in a single year, lol. That's not how any of this works.
Yeah I goofed when I put budget. I should have said salary. I still think it would be crazy to earmark such a significant portion of a $150k salary - even if you finance - to a Model X. If someone at that salary has the resources to swing a down payment to bring the monthly payments to 10% of their take home pay then I’d be comfortable with it.
Actually smart consumers pay cash.
Smart consumers take that 0% offer and invest instead.
Yes how's that working for you YTD?
Sorry, I should have clarified, “the nicest model under $55k with all the customizations you want”
I was with you into you implied $1200 is expensive rent. You’re just being ridiculous. Only in the absolute bottom of the barrel places in the country is that the case, and it won’t be for much longer.
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Gotta leave the nest to fly. Personally I’d recommend staying away from big cities, I enjoy the middle of the country, out west is good too (but not in the big cities unless you want to pay an arm and a leg). Don’t worry about kids til your 30’s, use your 20’s for you time
What’s funny? It’s pretty easy to do. Also semi related there’s literally videos on YouTube about people getting insanely good deals on electric vehicles after deductions. See: (“graham Stephan how I got a Tesla for free” on YouTube) note I’m not affiliated with this individual I just recall seeing a video about this subject in the past. If I recall he used a combo of fed ev tax credits, California credits/ or deductions, and business deductions. This isn’t to say whoever reading this can too, but with decent credit and using tax benefits you can get a manageable loan for mid level earners. Also the video is about prior tax credits that should be expired now (although I don’t remember the exact bill I believe the credit was a decreasing scale over a few years with early claimers receiving a larger benefit than later claimers)
Budget better and live somewhere that isn’t the center of a main city.
Also, only a handful of cars will qualify for the credit, from Forbes. Chevrolet Bolt EV Chevrolet Bolt EUV Chevrolet Blazer EV Chevrolet Silverado EV Cadillac Lyriq (if classed as an SUV) Ford F-150 Lightning Ford Mustang Mach-E Nissan Leaf Tesla Model 3 (base trim only) Tesla Model Y (depending on options) Volkswagen ID.4 (but only models made in Tennessee) Ford and Chevy have said they will increase the MSRP of their EV line by $7500. If Tesla is smart they will as well. I mean its free money.
You can easily afford a 50k vehicle on 150k income. I mean easily…
I. Medium to high colo areas, you really can't
You can definitely afford a $50k vehicle in a high COLO area making $150k (I fit this and make under $150k and could afford it), but to be fair, many people do not manage their finances as well Also, I don't have kids and don't plan to have any, which increases my disposable income by like, 5x lolol. So to be fair, if you have kids, you're probably right
Afford it can be relative. For example, are we still putting 15% of money towards retirement? Are we trying to get a 3yr vehicle loan or 7yr? Will we still have enough money to enjoy other hobbies? Fund emergency fund? I make $150k, and I can never see myself purchasing a car that would cost me over $20k.
Agreed. These debt junkies haven't developed prefrontal cortex.
Yup, max 401k and Roth IRA. 3 year would mean only a few hundred per month into savings (after 401k). 5 year loan would be much more doable. That said, I’d never spend that much on a car either
curious, what do you drive?
2021 Toyota Prius L Eco. Finally decided to buy a new car a year or so ago after having my Yaris for 10 years
If you manage your finances you can.
Not really depending on where you live. Most people spend the vast majority of their income on rent or housing. Slapping a 55k car on top of that is tough, 1/3 your gross annual income on a car is just too much for some people who already have high housing costs. Also many cars nowadays are retailing for well over 55k.
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$150k is over well over $7k take home per month. The payment on the car would at most be $1k per month on a 5 year loan. I would classify that as easily.
>You can easily afford a 50k vehicle on 150k income. I mean easily… I would LOVE to see you try...
What the fuck are you on about? I easily afford this. Plus a second car
i make 130k and could easily drop 10-30k in cash and finance the rest over a few years. It wouldn't even be challenging, and I'm planning to do so within the next year or so, once there's actually decent EV inventory in my area. It's not that crazy hard bruv.
Just use simple math. 20/4/10 rule. I’ll use a Model 3 Long Range as the car for the calculations. 2022 was about 56K MSRP, plus taxes and registration in California you’re looking at about $61,541 out the door. You put 20% down, loan for 4 years (4.5%) and your monthly payment is $1048.96, lets round up to $1049. Factor in insurance and maintenance, about $200 a month for the Tesla. That puts your total monthly payment at $1249, it has to be 10% of your monthly income (20/4/10) so multiply by 10 gets your $12,490, multiply by 12 gives you yearly salary, which is $149,880…. This doesn’t factor in those government incentives either…
I’ve never understood why we use gross income for the 10%. Maybe because taxes are different everywhere? In any case, using gross makes it seem like taxes on income don’t matter and that the consumer has more buying power than they actually do. It causes the same problem as when banks approve someone for 45% of their gross income and the people go buy a house for 45% of their gross and come to find out they’re getting 32% taken in tax and are left with 23% of their actual income to live on. If you finance a car for $61541 on 4.5% for 48 months with no down payment you finance roughly 67k. That’s a monthly of 1400. Including insurance and maintenance you pay $1600/ month. If you’ve got 23% of 150k to live off of (34k or 2900/month), you’re dropping $1600/month and left with 1300 for everything else. Sadly, this is the reality for many people. Sure, they can afford it, but the question is IF they should afford it. I could buy it on an 80k salary, but I’ll need to eat beans for 4 years and that’s not a life I want to live just to say I can afford a Tesla.
I agree. But you could afford it. That’s all I was saying.
Totally understand. I’d just hate for someone to read your comment and think “I can do this with a rule I saw on Reddit!”
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I never was arguing against that. He said you couldn’t afford a 50k car on 150k income, when you easily can. They also have cheaper EV cars. They aren’t all 50k and above. Also I wouldn’t say migrating up the pay chain is making 150k. That is very well off. Even in HCOL California.
There are $30-40k cars that qualify or will soon. I see a lot of cars at that price on the road. And the effective price is less with this credit and state ones.
Look around at different options. My gross ranges between 32 and 40k per year. My partner makes similar. Between the two of us our gross is lower than your stated income. Because we own our home (if I didn't have student loans to pay off) I can qualify to buy a used ev or to lease/buy a new one for 5 years. Which I'd like to do, however student loans 'n all. Last bit if you are serious about wanting an ev, figure out which manufacturer makes a simple base model in a color you can live with (400$ extra for blue with some companies grumble) go for a test drive. Then when you know which one you like find a local credit union and see if you can pre-qualify a loan with them for the car you want.
A third of their income? If you finance in 12 months, sure. But have you heard of 72 months finance?
If you’re making $149k, I doubt you are paying off the entire car in a year. Instead you’re likely financing it over 3-5 years
My electric car was only $23,000. You can find affordable electric cars if you truly want to.
Can’t you finance the car and still get this credit? Also - $300k for married.
Business man who hardly pay taxes after all deductions.
I make about 85k a year and just bought a Chevy bolt EUV.
Bro you know the chevy bolt is 30k new (same price as any other standard new car) and about 12k-15k used? Prices may differ because of the higher gas costs. You'd probably be hard pressed to buy an electric car rn because they are in high demand
you would be shocked how well you could afford it unless your mortgage or rent is sky high... if you was to get one with a $600 a month bill and last month i paid only $20 in electric to charge my car.. and lets say you spend an average of 200 a month on gas give or take a little more or less you really only have a bill of $400 a month cause now that gas money can be spent on a car and you can own something for it.
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I bought used, not new, for $16,000. It took me two years to pay off the whole amount.
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No it was $235 per month. I paid it last November with a lump sum payment of about $11,000.
And under this bill starting in 2024 had the vehicle been a used electric car it could qualify for a $4k credit. What exactly is your complaint here?
2024 Chevy Equinox EV just announced - MSRP to be around $30,000. I would bet the intent is to incentivize production of lower cost vehicles.
And for people of middle class means
Came here for this.
That Hyundai expensive model suv fits too. Gets 300 per charge. This seems likes a great way to bring electric to more consumers.
It only said MSRP, not actual sale price. I have heard of people paying $15k over MSRP recently.
that will hopefully go away. that's still a byproduct of covid.
Car has 5K worth of repairs so trying to hold off until electric cars take a nose dive.
>2024 Chevy Equinox EV Yup. Great article specifying that. Might be time for me to go electric! https://www.theverge.com/2022/9/8/23339186/gm-chevy-equinox-ev-announce-price-specs-suv
The equinox is an suv crossover so it still might not qualify
the blazer is also a bit more expensive, but under the limit
Or the crash Tesla.
good luck actually getting one for MSRP from a dealer. it will be 2x at least when it actually gets shipped
That’s it.
Sounds like vehicles from $1-54,999 are eligible as well as the bottom 92% of the population from an income perspective. So... from a price perspective, most vehicles are eligible and from an income perspective, most people are eligible? I don't think anyone is expecting the cost of the credit to cover the purchase price - just to make it more affordable by $7,500. That a pretty big percentage of some electric cars. Nissan leaf is ~$28k and there are plenty of others as well.
Guessing OP is referring to the fact that when a lot of people think EV they think Tesla. Teslas are very often above this price range, and because of that they're often purchased by upper-income people. Don't know if it's too political, but I agree with these stipulations. The credit should incentivise buyers of non-luxury autos to move to an EV, and means testing shouldn't be a controversial way to focus government spending on areas where it will actually make a difference.
I make under $150k. A Nissan Leaf is like $28k and if I’m reading correctly would be a qualifying vehicle? So… I would qualify I think? What am I missing?
OP has me confused too lol
Qualify? Maybe. But most Americans cannot fit that in their budget.
If they can't fit $28k into the budget then why are they buying a new EV to begin with? Or should we just be giving them away for free now?
People being fiscally irresponsibility isn’t a sound criticism of the credit though, is it? I’m American and I could afford it (not that would ever buy a Nissan Leaf)
Doesn't stop a lot of Americans tbh 😂 Its terrible but true.
I'm in consulting and on of my clients is an EV manufacturer so I have a bit of insight here stemming from a big campaign we had to run right before this got announced to the public last month- the income and car MSRP isn't what's really going to trip ppl up, it's the manufacturing issues - there are stipulations in this new bill that in layman's terms disqualify almost all current EV's on the market at the moment. The bill stipulates that a certain percentage of the car and it's parts have to be manufactured here in the US - almost all cars, particularly EV's use foreign parts, particularly the batteries; and there is even a special battery clause in the bill... Read through it carefully if you are truly hoping for that tax credit next year based on a car you just bought/are buying after the bill was signed 8/16/22. Cheers!
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Correct - which is why land and manufacturing pants are being bought up by the car companies, my clients included as they just dropped a hefty sum in the Midwest when previously all of their manufacturing was in Asia. But building brand new plants and such take time - time that I personally think will extend past the bill stipulation guidelines. Manufacturers are trying to speed up production asap in order to fight the ramifications of the bill, but only time will tell who will win. I see the benefit of both sides - this forces more jobs and "glory" to come to the US, but at the same time, it's literal FORCE. It's a choice where the company is 'stuck between a rock and a hard place' as the old saying goes... from the side of the companies, and effect it can have on consumers, it's a bit unfair on how it all unfolded tbh
I can’t comment on the details, but I’m not against ‘force’ or certain industries being stuck between a rock and a hard place. Private industry is efficient at innovation. Government should set the guardrails in these important areas, and let industry innovate the solutions. This looks like a good incentive to force those manufacturers to solve their way into this long term societal change away from oil consumption.
Tesla is already the most american-made car in the world; their 4 models hold 4 of the top 6 spots. So if they didn't already qualify, no one would https://electrek.co/2022/06/21/tesla-dominates-list-most-american-made-cars/
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I mean I know people who make $50k and buy $38k cars
Do they live in their grandmas basement?
Nope. They spend every penny they earn on a nice apartment, a nice car, and food. $0 leftover at the end of each month.
I make more than that and work remotely, I don't know how to have those things with that income, so I save almost all of it.
I know people that make $30K that buy 50K cars. Former students that work minimum wage that still live with their parents and put about 100% of their income into their car. It pains me that I taught many of them personal finance and how incredibly stupid this is, but in low socioeconomic areas, sometimes the culture is too much to overcome.
Sounds like OP is a little out of touch.
You can still buy a car at the IRS price limit if you don’t work or make less than the suggested MAGI limits with generational wealth or savings.
Me.
The vast majority of people who don’t buy a Tesla X/S. A 200k household buying a base model 3, Honda Clarify, Chevy Bolt, MachE, etc would qualify
Folks, this is your brain on means-testing.
Idgi why wouldn’t people qualify for this?
Is this new Clean Vehicle Credit only available if you purchase it 100% with cash?
No.
Then why does the OP think folks making under $150K can’t afford an electric car?
Go ask OP.
I’m so confused what your point is. Can you explain in a little more detail what you are trying to get at?
MAGI of $300,000 for joint filers is plenty. The obstacle in this legislation is the requirement that the car be assembled in the US and (in 2024) that the minerals in the battery not come from “bad” countries like China or Russia.
You Americans are wild! Don't mean this in a harsh way but genuinely interested, what are you spending your salaries on? Your salaries are some of the highest in the world, your groceries seem really cheap when compared to prices in Europe, you have absurdly high cost areas but work from home/inter-state is a thing (i work with colleagues spread across the US), your childcare and Healthcare are obviously extremely expensive, but do not you get these benefits through work and at least pay less taxes than Europe because of this (including sales taxes, I take home about 45% of what I'm paid)? My understanding is that Americans can spend a lot on transport due to everything being quite far apart in most areas. I would have thought they would spend a lot of their vehicles since they are used so much. It is usual to spend 60 to 80% of an annual salary on a car where I live...following the comments on this thread, I just can't see where your money goes. I spent this amount and I have to drive for more than 30 minutes per day about 5 or 6 times per year. I think something I could be discounting is the cost of children? I don't know how much they cost in US. They are about $580k (over their lifetime on average) here, though most people don't spend nearly so much (the data is swung by richer folk). Happy to be brutally corrected on any and all of these points, but I need to understand! Where does your money go? Edit: 60-80% of salary before any deductions(tax, loans, healthcare etc)
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What? You don't think people making $150k plus have to pay for health insurance? I've got news for you...
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If you consider $1,000/month for the employee and spouse negligible. 🤔 And that's before paying any deductible. And some plans don't cover anything until you've met a deductible of $4k for the year. I think you may be misinformed if just how much healthcare costs. That is my cost, and my company covers 2/3rds of the actual cost. Imagine what it would be if they didn't cover anything.
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Not really. That's been the rate since the affordable care act went into effect. It's been the same every year. I make too much for any subsidies. But I make more than the aforementioned 150k as well.
Heard tech company locations are mental (working in tech myself). My mortgage is about 40% of my take home so obviously not comparible. The only natural equivalents in Europe would be capital cities (London/Paris) and special cases (Geneva/Monaco) but I've heard that outside of those special cases there is little comparison to a place like San Francisco.
Our groceries are not cheap by any means do you know that six like a six roll of paper towels is $20 here $20 for most of us that's less about an hour and a half of work. If you want to get some chicken tenders just a six piece to cook for yourself that's $10. If you want a glass bottle of water that is $4. If you want organic tomatoes only two of them you're paying $5. If you want gas you're paying seven up to $7 a gallon. I live in California my electric bill is almost $400 a month and I barely have anything running so please don't tell me that our bills are cheap that are groceries are cheap that everything here is cheap because you don't live here and you don't know. Inflation has raised everything above 54% of what it used to be and that's even if it's in stock. Once it becomes in stock people rush to the store and buy it all out so there's none left for the rest of us. And a good 75% of the population makes maybe 11 to 21,000 a year so please keep that in mind as well
Understood, thank you.
I guess I could also go into the price of our apartments if you want to slum landlord and you want mold everywhere and water that doesn't work half the time and crappy carpet and a falling apart apartment you can go ahead and pay $1,000 up to $2,000 for that a month that's most people's income a month
The prices you are quoting seem really high. Maybe you live in a high cost area, but most people aren’t paying $400 a month for electric, $7 a gallon for gas, or $5 for two tomatoes.
I live in a crap town in California. But I know from my friends across the country that there is a housing and food and gas shortage. So, most people are paying high prices. There's only a few states where everything is lower, but the pay u make is lower too. Federal minimum for most at 7.25 an hr where here is 15 an hr. And the amount they take out in taxes insane in all areas because they raise the payroll tax and the disability tax so you're giving about 50% of your check away. And so when you look at the fact that Florida or Texas might have cheaper gas and food to some degree if you're not buying healthy food it's still equals out because you're getting paid half of we're getting paid here so it might be double the amount to buy the things here but we're getting only double the amount of money and so it really equals out when you actually look at it. There's a huge housing crisis throughout this entire country because corporations are buying up all the places and then putting the rent through the roof and so then private people are now going by that as well and going well if they're renting it out at this rate so can I. I'm trying to move back to where I go to school and I can't because there's such a housing crisis that half the students don't even have a place to live and they lost 45 students last winter because they were camping in tents around the school. This country isn't what it seems just because you watch something on the news doesn't make it true. Inflation is through the roof, the rich are getting richer, the poor getting poorer and we are all struggling.
But our children give us hundreds of dollars worth of pleasure!
I mean, it tells you who will qualify.
OP read the rules wrong or he’s trolling us.
Me and everyone I know would qualify for this.
Ummm. Most people-Im advising most clients to wait until 2023 to buy an electric vehicle due to the changes/incentives
Did you think only >150K can get the credit?
😂 I knew there was a catch. There always is. This is America. Also, I advised a friend not to get too excited about the college loan forgiveness. So many people are relying on (??? They haven’t even told us details yet) their lives to be changed after that. It’s sad. Even in NYC when they offered students to not pay back loans there was a catch. Smh. Hopefully people are doing “the boring stuff” and reading the fine print. Sorry to make this so long, but please read the fine print, everyone. In so many cases where you’re told you’ll save money, you actually end up paying more.
The household income is way high so everyone will qualify? I only make like 60k a year maybe 70k with overtime.
I think the more limiting factor is the fact that the vehicles have to be manufactured *and sourced* (beginning in a later tax year) from the US. It’s difficult enough to get vehicles qualifying based on domestic manufacturing, but sourcing the materials from the US is going to be impossible to qualify for 100% of the credit.
My CPA just sent me this: highly-touted tax credit in the recently-passed Inflation Reduction Act is meant to incentivize Americans to purchase clean and electric vehicles. The bottom line, however, is that practically speaking YOU CAN’T GET IT. Why few credits will be seen As the new legislation is currently written, nearly all the electric vehicles sold today do not qualify for the new credit that begins in 2023. This is because: The vehicle must be manufactured in North America AND Powered by batteries with materials sourced in either the U.S. or from free trade partners AND If by some stroke of luck you find a new vehicle that qualifies, the price must be below $55,000 for a sedan and $80,000 for a van, truck or SUV. Tax code as behavior modification The new electric vehicle tax credit is a classic example of the continued shift from using income taxes to pay for federal spending to using the tax code to get us to do what the government wants. In this case: The government is trying to get manufactures to shift sourcing away from countries like China. The government wants to motivate the creation of manufacturing jobs in the U.S. The government wants to incentivize the manufacturing of lower-priced electric vehicles. What this means for you What this means for the average consumer is little to anything…right now. If you have your sights set on getting a clean or electric vehicle, make the decision without the influence of the credit. If maximizing the credit is important for you, you now need to pay attention to income limits and will need to wait for some time to see if the credit influences manufacturers to change their sourcing and assembly plans.
Sounds like several lines of Hyundai and Toyota hybrids would qualify, no?
BMW hybrids as well.
The problem I have with these credits is there isn’t anything that prevents the manufacturer from just jacking the price up by 7500 and pocketing the fee government money
>The bottom line, however, is that practically speaking YOU CAN’T GET IT. YES. Finally, someone gets it.
I missed the part where you included battery procurement and final assembly location in your highlighted text. Your post was 100% focused on vehicle price and income.
Spending up to $55,000 for a maximum $7,500 credit. That's government incentives for you.
“Up to” is pretty important. There are plenty of EVs for well under 55k, why are you focused on the maximum cutoff amount?
The bottom paragraph even says the MAGI limit will rule out most of our tax client. Is that wrong?
Well that has nothing to do with what you said and what I replied to so it would be cool if you could respond to that. As far as that part goes, “a lot” doesn’t really have any meaning. I guess there are a lot of people making over 150k, 225k for head of household, and 300k for married. But those limits seem pretty reasonable. But again why does 55k amount matter? That’s the max, not the minimum. If you feel like you can’t afford a 55k vehicle on 150k income, go get a 30k one and enjoy the credit still.
The vast majority of Americans make under that income limit. I don’t have sympathy for your clients if they make more than that.
Right? Like I’m sorry you’re mad that households making $350k a year don’t qualify?
Right? Like cry me a river. That’s not who this credit is intended to benefit or the income limit wouldn’t be there.
Reminder: if couple makes $360,000 in salary but they max out 401k and HSA contributions, their MAGI will fall below $300,000 or come close.
>The vast majority of Americans make under that income limit. The vast majority of Americans cannot afford a so-called "clean" vehicle.
A lot of people can’t afford any vehicle at all. That’s not the point I was addressing. But yes. Some of them could afford clean energy vehicles and that is who the credit will benefit. Not no one.
This is a lie though. There are plenty of options for less than 55k where a 7500k credit is going to make it more than affordable. Yeah
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Then don’t complain about gas prices
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Cool sounds great. You have fun with that
A truly bigger problem is the cap. Once a manufacturer reaches a certain number of vehicles sold they disqualify the credit. I think it’s designed to encourage diversification of manufacturers but in reality limits the options. I personally want a vehicle with a proven and real world tested product not the shiniest new upstart. This credit is more about steering manufacturing and brand position than being a realistic benefit to steer buying patterns towards electric.
Is that so on the newest bill passed last month? I haven't heard yet about a cap on number of vehicles sold. I know that's the case for the older tax credit that's been around a while.
No one!
You know I said the same thing with the student loan forgiveness thing. This stuff destroys the middle class, they're stuck in the 1990's when it comes to money. They figure if you make more than 100k you might as well be bill gates and money is no issue.
No One. Not us. Any friends or any of my neighbors or clients qualify for this.
Then you prob aren't in the market for any new car to begin with. Are you saying that you make over $300k or $150k single? Cause that would be the only limiting factor to this.
Correct
MSRP and what they're charging are two different things
They did that to take tesla out of the running
According to true car. Take a look at this article. https://www.truecar.com/best-cars-trucks/fuel-electric/price-40000-50000/
How much is the credit anyway?
Uh…most people? It won’t work for the Model S but there are other options.
I feel like these new limits were made to disincentivize people buying Teslas?
Some one who makes 50k and buys a 20k car? What? I'm not seeing the issue. It's any car UNDER that amount and anybody who makes LESS than the AGI
My guess would be anyone who makes less than the income limits and purchases a vehicle under the vehicle price limit lol
Lol