It’s important to note that any unused portion of the $7,500 is not available as a refund, nor as a credit for next year’s taxes.
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If you owed $10,000 in federal income tax, then you would qualify for the full $7,500 credit. At first glance, this credit may sound like a simple flat rate, but that is unfortunately not the case.įor example, if you purchased a Ford F-150 Lightning and owed say, $3,500 in income tax this year, then that is the federal tax credit you would receive. How much is the federal tax credit?įirst and foremost, it’s important to understand three little words the government slips in front of the $7,500 credit – “may” and “up to.” As in, you may qualify for up to $7,500 in federal tax credit for your electric vehicle. More on that below.įirst, let’s take a second to truly understand how the Federal EV tax credit currently works. In reality, the amount you qualify for is based on both your income tax as well as several specifications of the electric vehicle you purchase, including where it’s built. With that said, you cannot simply go out and buy an electric vehicle and expect Uncle Sam to cut $7,500 off your taxes in April. The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
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The idea in theory is quite simple, per the IRS – “You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). How does a federal tax credit work for my EV?
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Battery guidance update as of April 2023.What electric vehicles could qualify for tax credit as of January 1, 2023?.New Federal Tax Credits in the Inflation Reduction Act.
A quick history lesson on the expansion of EV tax credits.How does a federal tax credit work for my EV?.The goal is to help ensure you are receiving the maximum value on your carbon-conscious investment because, let’s face it, you’ve gone green and you deserve it. Luckily, we have compiled everything you need to know about tax credits for your new or current electric vehicle into one place. Lastly, there are other potential savings available to you that you might not even know about yet. Furthermore, new terms implemented Janulimit the number of EVs that currently qualify based on a number of factors pertaining to local US manufacturing. Whether you qualify is not a simple yes or no question… well, actually it sort of is, but the amount you may qualify for varies by household due to a number of different factors. As sales of electric vehicles continue to surge, many new and prospective customers have questions about qualifying for federal tax credit on electric vehicles, especially now that a slew of new credits have been reinstated to US consumers (alongside their fair share of confusing and ever-evolving conditions)
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