More EVs Will Qualify for Tax Credits After US Reverses Course

The Biden administration will allow more crossover SUVs to qualify for the newly-revamped electric vehicle tax credit following lobbying by automakers such as General Motors Co. and Stellantis NV.

The change announced Friday by the Treasury Department effectively expands the number of buyers who can take advantage of a lucrative $7,500 consumer tax credit by broadening the definition of how a sport-utility vehicle is defined. The tweak matters because under Democrats’ Inflation Reduction Act, SUVs costing up to $80,000 can receive the tax credits, while passenger-car buyers get nothing if the vehicle costs more than $55,000.

Specifically, Treasury said it would begin using the Environmental Protection Agency’s fuel economy labeling when deciding which vehicles qualify for an SUV. The adjustment is retroactive to Jan. 1, meaning consumers who already bought vehicles under the new definition can get the credit, the agency said.