As the world becomes increasingly conscious of the impact of carbon emissions on our planet, electric vehicles (EVs) have gained immense popularity. Electric cars are not only eco-friendly, but they also save money on fuel and maintenance costs. Additionally, the federal government offers an incentive in the form of the Electric Vehicle Tax Credit to encourage people to purchase electric vehicles. In this guide, we’ll delve into everything you need to know about the EV tax credit and how to Save Money While buying an EV Car.
What is the Electric Vehicle Tax Credit?
Jump to a section of the content:
- 0.1 What is the Electric Vehicle Tax Credit?
- 0.2 How Much is the Electric Vehicle Tax Credit Worth?
- 0.3 Who is Eligible for the Electric Vehicle Tax Credit?
- 0.4 When Does the Electric Vehicle Tax Credit Expire?
- 0.5 How to Claim the Electric Vehicle Tax Credit & Save Money?
- 0.6 Final Thoughts: Save Money Buying a Car in 2023
- 1 Install Rits Browser & Save Money
The Electric Vehicle Tax Credit is a federal tax credit offered to taxpayers who purchase a qualifying electric vehicle. This credit was introduced in 2008 as a part of the Energy Improvement and Extension Act of 2008 and was subsequently extended through legislation several times. The credit is available for new and used electric vehicles, and the credit amount varies based on the make and model of the car.
How Much is the Electric Vehicle Tax Credit Worth?
The amount of the tax credit depends on the make and model of the electric vehicle. The credit is worth up to $7,500 for electric cars with a battery capacity of 16 kWh or more. If the battery capacity is less than 16 kWh, the credit amount is reduced proportionally. For example, if the battery capacity is 10 kWh, the credit would be $4,166.67.
It’s important to note that the tax credit is not a rebate, but rather a credit that can be applied against your federal income tax liability. A $7,500 EV tax credit can reduce your tax liability to $2,500 if you owe $10,000 in taxes.
Who is Eligible for the Electric Vehicle Tax Credit?
To be eligible for the electric vehicle tax credit, you must meet the following criteria:
- You must be the original owner of the vehicle. The tax credit is not available for used vehicles purchased from previous owners.
- The vehicle must be new or used and have never been titled or registered.
- The vehicle must have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.
- The vehicle must be powered by an electric motor that draws electricity from a battery with a capacity of at least 4 kWh.
- The vehicle must be acquired for use or lease and not for resale.
It’s worth noting that credit is not available to individuals who lease their electric vehicles. Instead, the credit goes to the leasing company.
When Does the Electric Vehicle Tax Credit Expire?
Tax credit for electric vehicles extended till December 31, 2026, for eligible purchases. After that date, the credit may be reduced or eliminated depending on any new legislation.
It’s also worth noting that the credit is subject to a phase-out period. The credit begins to phase out once the manufacturer has sold 200,000 qualifying electric vehicles in the US. Tesla and GM reached the limit, so their cars no longer qualify for credit. Other manufacturers, such as Nissan and Ford, still offer full credit.
How to Claim the Electric Vehicle Tax Credit & Save Money?
To claim the electric vehicle tax credit, you must file IRS Form 8936, which is titled “Qualified Plug-in Electric Drive Motor Vehicle Credit.” You’ll also need to attach a copy of the bill of sale or lease agreement and the vehicle’s certification from the manufacturer that it meets the criteria for the credit.
Final Thoughts: Save Money Buying a Car in 2023
The Electric Vehicle Tax Credit is a great incentive for those looking to purchase an electric car. Not only does it save you money on taxes, but it also contributes to a cleaner environment. However, it’s important to do your research before purchasing an electric vehicle to ensure that you can make a positive impact on the environment and Save Money by buying a Car.
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