Are you considering buying an electric vehicle (EV) but worried about the cost? The good news is that the IRS offers an EV Tax Credit of up to $7,500 to help offset the cost of your new car. In this article, we will discuss who is eligible for the EV credit, what type of vehicles qualify, and how you can apply for the credit. With all of the information provided here, you will be able to confidently maximize your savings when buying an EV.
What is the EV Tax Credit?
The deduction is a part of President Joe Biden's Inflation Reduction Act of 2022. More than $370 billion in tax breaks and other subsidies are set aside in this law for renewable energy, wind power, and battery-powered vehicles. The new rule, which went into effect on January 1, can be utilized to get financing for things like cars, solar panels, and electrical system upgrades.
To whom does the $7,500 tax credit apply, and what must be done to qualify?
A single taxpayer must have earned less than $150,000 or a married couple less than $300,000 in 2021 to qualify for the maximum credit of $7,500 allowed by the law.
You should know that the credit only applies to electric vehicles MSRP up to $55,000 or $80,000 for trucks. Customers should be aware that the credit amount decreases by $500 for each criteria the vehicle does not meet, for a maximum credit of $7,500.
Eligible Vehicles
According to the Department of Energy, 29 electric models were manufactured in the United States corresponding to 2022 and 2023 models, which belong to the brands Audi, BMW, Chevrolet, Chrysler, Ford, GMC, Jeep , Lincoln, Lucid, Nissan, Rivian, Tesla, Volvo, Cadillac, Mercedes and Volkswagen.
For a vehicle to be eligible, it must:
* Have a battery capacity of at least 7 kilowatt hours
* Have a gross weight class of less than 14,000 pounds
* Be manufactured by a qualified manufacturer
* The sale qualifies only if the vehicle is new. Sellers must report your name and tax identification number to the IRS.
Follow IRS URL for more information-> Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After | Internal Revenue Service (irs.gov)<https://www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-purchased-in-2023-or-after>
Vehicles purchased on or before 16 August 2022, may be eligible for a $7,500 tax credit as well. However, the eligibility requirements are different<https://www.irs.gov/credits-deductions/credits-for-new-electric-vehicles-purchased-in-2022-or-before>. After that date, a final assembly in North America requirement was added.
Contact Surya Padhi at Sure Financials for any questions and clarification. Surya Padhi is an expert who keeps current on tax law changes as well as a member of the National Association of Tax Professionals National Association of Tax Professionals (NATP)<https://www.natptax.com/> and National Association of Enrolled Agents (naea.org)<https://www.naea.org/>. Visit Welcome | Sure Financials & Tax Services, LLC (surefintaxsvs.com)<https://surefintaxsvs.com/> for more information and contact us by calling +1 908.300.9193.
