[Kobebmw]

Does anyone know if the 2023 X5 45e will qualify for 7500 federal tax credit?

[DonKeedic]

Originally Posted by Kobebmw

Does anyone know if the 2023 X5 45e will qualify for 7500 federal tax credit?

Depends on when the allocation is exhausted. I'm sure early recipients of the 2023 will get the credit. People later in the year may be at the step down depending on BMW sales.

[jiggie]

Probably. The LCI (2024) might be the first X5 that might not have the full Tax Credit.

[cptcolo]

Model Year 2023 X5 45e should have no problem getting the full $7500 federal tax credit, if ordered anytime soon. If you are considering this, you may want to act soon though, that way you take title of the car before the end of year, so that you may take the credit toward your 2022 taxes. Otherwise if you take title of the car in 2023 you will have to wait an entire extra year before getting your tax credit (the tax credit must be taken in the year that title is exchanged, it can not be taken in part in a previous year or in a year afterwards, even if you aren't able to take advantage of all of it).
https://www.irs.gov/forms-pubs/about-form-8936

BMW's Quarterly US Plug-In EV sales (PHEVs and full BEVs, just using "EVs" for the rest of the post), as defined by the IRS, are shown below. Data reference: https://www.irs.gov/businesses/irc-3...uarterly-sales. Total sales at the end of the 2021 were 135,679. Projecting the data predicts about 30k sales in 2022, meaning we would end up at 166,324 total EV sales at the end of 2022. However it has been noted BMW global EVs are up significantly this year (official 2022 quarterly numbers won't be available until early 2023). 30k for 2022 is likely an underestimate due to increased EV demand in 2022 (gas prices have skyrocketed). 40k or even higher is likely more reasonable, meaning by the end of 2022 their total sales would be at ~175,000, getting closer to the 200,000 threshold.

Based on the data, I have outlined three Scenarios for what will happen next year. I personally think Scenario 2 is the most likely outcome. Again the dates below are based on when title for vehicle is taken (basically when you pay for the car and get the keys), NOT when you order it.

Scenario 1 - BMW Reaches 200,000 EV sales in Q1 2023
This would only be possible if BMW EV sales in 2022 were dramatically higher than previous years.
Now to 6/30/23: $7,500
7/1/23 to 12/31/23: $3,750
1/1/24 to 6/30/24: $1,875

Scenario 2 - BMW Reaches 200,000 EV sales in Q2 2023
I believe this is the most likely outcome given the increase in demand for EVs in general, we will know a lot more once the 2022 data is released in early 2023.
Now to 9/30/23: $7,500
10/1/23 to 3/31/24: $3,750
4/1/24 to 9/30/24: $1,875


Scenario 3 - BMW Reaches 200,000 EV sales in Q3 2023
This still assumes an increase in EV demand relieve to previous years, but based on the increased demand and no reprieve from high gas prices anywhere in sight I doubt it would go past this.
Now to 12/31/23: $7,500
1/1/24 to 6/30/24: $3,750
7/1/24 to 12/31/24: $1,875

The Phase Out Schedule for all manufactures is tracked here:
https://www.fueleconomy.gov/feg/taxevb.shtml

Disclaimer: the above is not financial or tax advice, please consult your financial or tax professional.

[desmo907]

I wondered about this too as the websites only indicate 2021-22 model years for the credit.
Dealer tells me they are making the 2023 model now and I can get it this year.

I need the credit this year

[TurtleBoy]

Originally Posted by desmo907

I wondered about this too as the websites only indicate 2021-22 model years for the credit.
Dealer tells me they are making the 2023 model now and I can get it this year.

I need the credit this year

Make sure when you order it you enter into a binding contract (a non-refundable deposit and sign order will likely qualify) to ensure you get the credit. Depending on when the IRA is signed and some guidance issued, the credit may not be available.

[Tall Paul]

Originally Posted by TurtleBoy

Make sure when you order it you enter into a binding contract (a non-refundable deposit and sign order will likely qualify) to ensure you get the credit. Depending on when the IRA is signed and some guidance issued, the credit may not be available.

Many dealers are reluctant to provide us the needed documentation (mostly from a lack of understanding). For those of us that will be seeing delivery after 8/13 but before 12/31, shouldn’t we qualify for 1/2 the $7,500 (and maybe more if the transition rules allow us to use prior rules)?

[desmo907]

Originally Posted by Tall Paul

Many dealers are reluctant to provide us the needed documentation (mostly from a lack of understanding). For those of us that will be seeing delivery after 8/13 but before 12/31, we should qualify for 1/2 the $7,500 (and maybe more if the transition rules allow us to use prior rules).

I actually prefer they let me back out of contract if they cannot deliver my options and by the end of year... but suspect they pretty good on delivery now

[TurtleBoy]

Originally Posted by Tall Paul

Many dealers are reluctant to provide us the needed documentation (mostly from a lack of understanding). For those of us that will be seeing delivery after 8/13 but before 12/31, shouldn’t we qualify for 1/2 the $7,500 (and maybe more if the transition rules allow us to use prior rules)?

If you don’t use the transition rule it is currently unknown, last I saw, if the batteries would meet any of the requirements for the credit.

[Josh_H]

Is a binding contract needed only for delivery's in 2023 or also if you still take delivery in 2022?

[desmo907]

I am still unsure if tax credit for the Model Year 2023 delivered this year can be claimed on 2022 tax year. My accountant mentioned if it was added to the "list" it can be, but it is NOT yet on the list The IRS requires you enter the year and VIN so they check.

What happens if it is NOT on the list ):

[nZtiZia]

Originally Posted by desmo907

I am still unsure if tax credit for the Model Year 2023 delivered this year can be claimed on 2022 tax year. My accountant mentioned if it was added to the "list" it can be, but it is NOT yet on the list The IRS requires you enter the year and VIN so they check.

What happens if it is NOT on the list ):

you should unless the language changed. i picked up my MY21 45e on Dec 2020 and filed for the tax credit on my 2020 tax returns

[Tall Paul]

Originally Posted by TurtleBoy

If you don’t use the transition rule it is currently unknown, last I saw, if the batteries would meet any of the requirements for the credit.

I might be confused but was thinking since it’s assembled in the US, won’t we be eligible for $3,750 (assuming our MSRP is less than $80k, our income is less than the limits, etc?).

[TurtleBoy]

Originally Posted by Tall Paul

I might be confused but was thinking since it’s assembled in the US, won’t we be eligible for $3,750 (assuming our MSRP is less than $80k, our income is less than the limits, etc?).

No, being assembled in the US, NA actually, only makes a vehicle potentially eligible for the credit. But would then have to meet the battery requirements to get either a half or full credit. Any vehicles not assembled in NA are not eligible for the credit.

[Tall Paul]

Originally Posted by TurtleBoy

No, being assembled in the US, NA actually, only makes a vehicle potentially eligible for the credit. But would then have to meet the battery requirements to get either a half or full credit. Any vehicles not assembled in NA are not eligible for the credit.

Well shoot. Thanks for clear up my confusion.

[TurtleBoy]

Originally Posted by Josh_H

Is a binding contract needed only for delivery's in 2023 or also if you still take delivery in 2022?

Taking delivery in 2022 does not necessarily mean that you will be able to take the credit. The transition rule, which requires a binding contract, only pertains to vehicles ordered before the date of enactment which likely will be within a few days where the owner wants to claim credit under the old rules no matter when the vehicle is delivered. For vehicles ordered after the point whether or not you will be able to take a credit for the 45e that is delivered in 2022 depends on two things, when the Secretary issues the guidance on the battery requirements (you can take full credit for deliveries prior to the issuance) and if the 45e meets one or both of the requirement sets. More than likely however, that guidance will be issued towards the end of the year since the deadline for it being issued is 12/31/2022.

[RabbitCaesar]

Originally Posted by TurtleBoy

Taking delivery in 2022 does not necessarily mean that you will be able to take the credit. The transition rule, which requires a binding contract, only pertains to vehicles ordered before the date of enactment which likely will be within a few days where the owner wants to claim credit under the old rules no matter when the vehicle is delivered. For vehicles ordered after the point whether or not you will be able to take a credit for the 45e that is delivered in 2022 depends on two things, when the Secretary issues the guidance on the battery requirements (you can take full credit for deliveries prior to the issuance) and if the 45e meets one or both of the requirement sets. More than likely however, that guidance will be issued towards the end of the year since the deadline for it being issued is 12/31/2022.

Thanks for the great summary. This aligned with my understanding from another thread discussion in regards to 45e tax credit eligibility. My takeaways are: 1) too much uncertainties/ambiguities on the transition rule, especially around the binding contract; 2) take delivery as soon as you can, to enjoy the car and get tax credit!

[desmo907]

Originally Posted by TurtleBoy

Taking delivery in 2022 does not necessarily mean that you will be able to take the credit. The transition rule, which requires a binding contract, only pertains to vehicles ordered before the date of enactment which likely will be within a few days where the owner wants to claim credit under the old rules no matter when the vehicle is delivered. For vehicles ordered after the point whether or not you will be able to take a credit for the 45e that is delivered in 2022 depends on two things, when the Secretary issues the guidance on the battery requirements (you can take full credit for deliveries prior to the issuance) and if the 45e meets one or both of the requirement sets. More than likely however, that guidance will be issued towards the end of the year since the deadline for it being issued is 12/31/2022.

Still a bit confused...
"...The transition rule, which requires a binding contract, only pertains to vehicles ordered before the date of enactment which likely will be within a few days where the owner wants to claim credit under the old rules no matter when the vehicle is delivered...."

The latter part is a bit confusing... If I order the car this week, and get delivery this year, could I take the clomplete $7,500 credit or will this "transition rule" impact things?

I'm guessing nobody here is expert and I would hope they would just make this easy and enact new rules on Jan 1, 2023 but then its the US Gov!

[desmo907]

What is a "binding contract"? I was at the dealer today but did not order anything but may in a few days. They mentioned I do not even need a deposit. I assume I will get some binding contract?

They did mention I can back out for any reason also.

[TurtleBoy]

Originally Posted by desmo907

Still a bit confused...
"...The transition rule, which requires a binding contract, only pertains to vehicles ordered before the date of enactment which likely will be within a few days where the owner wants to claim credit under the old rules no matter when the vehicle is delivered...."

The latter part is a bit confusing... If I order the car this week, and get delivery this year, could I take the clomplete $7,500 credit or will this "transition rule" impact things?

I'm guessing nobody here is expert and I would hope they would just make this easy and enact new rules on Jan 1, 2023 but then its the US Gov!

In order to make sure you get the full credit you need to make sure you have a binding contract prior to when the new legislation is enacted. If you don't have a binding contract then you will be subject to the rules in place when it is delivered. If it is prior to the Secretary issuing the guidance on the battery requirements then you get the full credit. If it is after then you may get the full, partial or none. From what I have seen it would likely be partial or none.

[desmo907]

This seems a good summary .... https://www.consumerreports.org/cars...t-a9310530660/

[TurtleBoy]

Originally Posted by desmo907

What is a "binding contract"? I was at the dealer today but did not order anything but may in a few days. They mentioned I do not even need a deposit. I assume I will get some binding contract?

They did mention I can back out for any reason also.

There is no specifics on that but if you have a purchase agreement and give them a non-refundable deposit that will likely satisfy the requirement. You can make it part of the contract that your vehicle must have all options ordered if that is a concern. As long as you and your dealer agree on the specifics that would be doable.