Like to Save Money on Your Taxes with EV Tax Credit?
The EV tax credit may be just what you need. For the tax year 2022, the credit amount is $2,500 to $7,500, depending on the battery capacity in your electric or alternative motor vehicle. So if you are thinking of going clean and green, this could be a great way to save some money.
Let’s look at the federal EV Tax Credit (or Electric Vehicle Tax Credit), which vehicles qualify, and additional tax credits or incentives that may be available to you.
How do EV Tax Credits Work?
The electric vehicle tax credit applies to all-electric and plug-in vehicles, but the exact amount of the credit can be found on the DOE website fueleconomy.org. This incentive is not a mail-in check you receive after purchasing the car but a $7,500 tax credit you are eligible for. To encourage sales of plug-in electric vehicles, the federal government began providing a federal income tax credit in 2010 for eligible electric vehicles purchased after December 31, 2009.
Until now, buyers of EV electric vehicles and plug-in hybrid vehicles could receive up to $7,500 in federal tax credit if the manufacturer did not sell more than 200,000 qualifying vehicles. However, the federal tax credit begins phasing out for manufacturer vehicles at the start of the 2nd calendar quarter after the automaker has sold 200,000 eligible vehicles since January 1, 2010. So it’s important to check if the car you are about to purchase is suitable for a loan.
Updates on the New Clean Vehicle Tax Credit.
However, starting in 2024, taxpayers will have the option to pass credit to the car dealer at the time of buying to directly lower the purchase price of the car by the corresponding loan amount – great news for people who might want to invest in an electric vehicle — but dissuaded by high sticker prices. Under the new tax treaty terms, you can get this credit upfront at the point of sale of your electric vehicle.
The Clean Vehicle Tax Credit is a new tax credit available for purchasing qualifying electric vehicles. The EV tax credit is worth up to $7,500 and can be used to purchase a new EV. However, there are some new eligibility requirements under the Inflation Reduction Act, so be sure to check to confirm if you qualify before applying for the EV tax credit.
How Much is the New Clean Vehicle Tax Credit?
The Clean Vehicle Tax Credit is a great way to save money on purchasing a new or used EV. Depending on your vehicle, the credit could be worth up to $7,500 for a new car, or $4,000 for a used car. Not all EVs and not all taxpayers will qualify for the credit, so be sure to check the requirements carefully before making your purchase.
Electric vehicle tax credits are non-refundable tax credits that result from purchasing a vehicle with a battery-powered propulsion system capable of being powered by an external power source. Please note that this credit is non-refundable, which means you will not receive more credit than you owe in taxes. If your account is less than credited, you will receive the balance as a refund. You cannot carry this loan or balance into the next fiscal year. For example, if your total annual tax bill is $5,500, you can’t claim an EV tax credit over $5,500, even if your car qualifies. Instead, it’s a government policy that allows you to claim a federal income tax credit of up to $7,500 in the year you buy the car. The reward is a fixed credit, which means you only pay the total of $7,500 if your tax bill is at least $7,500.
So are you thinking of buying a new electric vehicle? Then, you may be eligible for a new tax credit!
To claim the new Clean Vehicle Credit, your vehicle must be an “EV” or “clean vehicle” – this includes hydrogen fuel cell cars and plug-in hybrid vehicles with four to seven-kilowatt hours of battery capacity. The credit applies to cars that cost less than $55,000 and vans, SUVs, or pickup trucks that cost less than $80,000.
Your EV must receive final assembly in North America if purchased after August 17, 2022. An eligible manufacturer must also make it. Finally, the modified AGI cannot exceed $300,000 if you are married filing jointly, $225,000 if you are head of household, or $150,000 if you file as single.
Eligibility on a Used Clean Car for Tax Credits?
To qualify for the new Clean Vehicle Credit on a used car, the following criteria must be met:
If you’re looking to get the new Clean Vehicle Credit for a used car, there are a few things you need to know. First, the vehicle can’t cost more than $25,000. Secondly, the modified AGI (adjusted gross income) can’t exceed $150,000 if you are married filing jointly, $112,500 if you are head of household, or $75,000 if you file as a single. And finally, whether you signed a purchase agreement for an electric vehicle manufactured outside the U.S.
Reach out to our Tax Service Professionals to verify your eligibility for the EV tax credit. Then, let us walk you through maximizing your return with an easy and simple online tax filing.