Kia is among some major industry manufacturers that have expressed concern over new sourcing and assembly requirements in the Inflation Reduction Act (IRA). Signed by President Biden last year, the IRA is a massive climate, energy, healthcare, and tax law that also unveiled a revamped electric vehicle tax credit.
To spur domestic EV production,” the Inflation Reduction Act requires that final assembly of so called “clean vehicles” occur in North America, for those EVs to qualify for the EV tax credit. The final assembly requirement became effective August 16, 2022. There is a similar requirement in the Inflation Reduction Act, that minerals and other key components (i.e., battery components), which are used to manufacture electric vehicles, also be primarily sourced in North America—by 2026.
Kia and Hyundai EV Assembly
South Korea has been vocal in its belief that the new EV tax credit requirements mean that many EVs, including those made by Hyundai and Kia, won’t qualify for the electric vehicle tax credit. To address those concerns, South Korean President, Yoon Suk-yeol, has met with President Biden to discuss the impact of the new EV manufacturing and sourcing requirements.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In September 2022, Vice President Kamala Harris also met with South Korea’s prime minister, Han Duck-soo. Both sides expressed a desire to work together throughout the implementation of the Inflation Reduction Acts’ electric vehicle tax credit provisions, which is ongoing at Treasury and the IRS.
The Affordable Electric Vehicles for America Act
Meanwhile, at the end of 2022, U.S. Sen. Reverend Raphael Warnock (D-Ga.) encouraged the Biden administration to consider flexibility in the implementation of EV tax credit reforms. The Georgia senator proposed the Affordable Electric Vehicles for America Act, which would create a phase-in-period for the Inflation Reduction Act’s electric vehicle sourcing and manufacturing requirements.
The idea is that if automakers have more time to meet the new EV requirements, more buyers who purchase electric vehicles, will qualify for the $7,500 EV tax credit.
Hyundai is set to begin construction this year on an EV auto manufacturing plant in Georgia. The multi-billion-dollar investment, which was announced in May 2022, is significant and could be directly impacted by the new electric vehicle tax credit requirements in the Inflation Reduction Act.
In proposing the Affordable Electric Vehicles for America Act, Warnock said that in addition to needing more time to meet onshoring requirements, Georgia automakers need more time to bring planned domestic EV facilities online. The Hyundai facility is scheduled to open in 2025 in Bryan County, GA.
Vehicles That Qualify for the Electric Vehicle Tax Credit
At this time, what, if anything will ever happen with Warnock’s bill. In the meantime, the Inflation Reduction Act’s requirements for sourcing and manufacturing electric vehicles in North America will be implemented in accordance with the law as enacted. The IRS expects to release that guidance in March.
Meanwhile, major EV industry automakers whose electric vehicles aren’t currently primarily sourced in North America, are likely to shift some manufacturing to the U.S., so that their vehicles might qualify for the new EV tax credit.
So, what can you do? Well, if you’re in the market for popular Kia Niro, Kia EV6, or Hyundai IONIQ5 electric vehicles for example, see if anything changes with the sourcing and manufacturing of Kia or Hyundai EVs. Also, keep an eye on the Department of Energy’s current listing of which vehicles are eligible for the new EV tax credit.
And, for more detailed information about the new EV tax credit and the Inflation Reduction Act, see EV Tax Credit Explained: What’s Changed and What's Ahead.
-
Two Don'ts and Four Dos During Trump's Trade WarThe financial rules have changed now that tariffs have disrupted the markets and created economic uncertainty. What can you do? (And what shouldn't you do?)
-
I'm Single, With No Kids: Why Do I Need an Estate Plan?Unless you have a plan in place, guess who might be making all the decisions about your prized possessions, or even your health care: a court.
-
Which Generation Pays the Most Tax in the US?Tax Burden Polls show that most people feel like taxes are unfair. But which age group bears the brunt of the tax burden in the United States?
-
How the Trump Harvard IRS Tax Threat Could Impact YouTax Law Trump's latest higher education showdown raises fundamental questions that could reach beyond Harvard's nonprofit tax status.
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and DiscountsTax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
-
Tax Time: Does Your Kid Influencer Owe Taxes?State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
-
Trump Plans to Terminate IRS Direct File programTax Filing The IRS Direct File program was piloted last year in 12 states and has since expanded to 25. But will it last under the Trump administration?
-
Did Florida’s Chance at $1,000 in Property Tax Rebates Vanish?State Taxes The Florida Legislature bypassed Gov. Ron DeSantis’ wish to cut property taxes and instead voted to lower the state’s sales tax.
-
How Caregivers for Adults Can Save on Taxes in 2025Tax Breaks Caring for your parent or spouse can be stressful, but the IRS offers tax breaks for qualifying taxpayers. Here they are.
-
New South Carolina Income Tax Cut Might Eat Your CashState Taxes South Carolina’s flat income tax bill could have the majority of residents paying higher income taxes. Find out how.
