The upcoming deadline for the EV tax credits has been motivating Americans to consider purchasing electric vehicles. The current tax law allows a credit of up to $7,500 on your purchase of an electric vehicle and can be claimed when you file your taxes in 2024. However, if you’re still weighing your options and won’t be ready to purchase until 2024, you may still be able to claim this credit next year.
As part of the Inflation Reduction Act, changes have been made to the EV tax credit law. For instance, there is now a price cap on qualifying electric vehicles, where the manufacturer’s suggested retail price must be $55,000 or less for passenger cars. The manufacturing cap has also been lifted, allowing more automakers to qualify for the credit.
To qualify for this tax credit, you must also meet the adjusted gross income requirement based on your filing status. For example, the income cap for a single person is $150,000, and for married individuals filing jointly, it’s $300,000.
To claim the tax credit, you need to file IRS Form 8936 along with the purchase of your electric vehicle. The IRS website should always be checked for updates on the qualifying electric vehicles.
When you purchase an EV in 2024, you can claim the credit at the point of sale, effectively reducing the vehicle’s purchase price. This is a part of the latest changes in the tax law and makes it more beneficial for individuals planning to buy electric vehicles next year.
After the completion of the revised EV tax credit, various changes have been implemented by the Inflation Reduction Act, which also split the credit into two halves: based on the vehicle’s battery components and critical minerals. There are requirements for the EV tax credit, including which vehicles are eligible for the tax credit and how it can be claimed.
This year until 2022, nearly 4 dozen EVs are eligible for the tax credit, including models from Chevy, Ford, Tesla, VW, and more, and the list is anticipated to grow as manufacturers submit updated information and change the suppliers.
The used electric and fuel-cell EVs qualify for a credit of up to 30% of the purchase price, maxing out at $4,000. However, there are restrictions on used EVs that individuals need to be aware of.
In addition to the federal EV tax credit, various states offer their incentives for clean vehicles. Depending on your location and the state laws, the incentives offered by the federal government should be checked to take into account any reform or restrictions placed by local laws.
The Inflation Reduction Act has also extended the tax break for the residential charging systems through 2032. It also allows tax credits for alternative fuel vehicle refueling property. Individuals looking to install an EV charger at home can claim a credit of up to $1,000.
The tax law changes have made it more advantageous for individuals to purchase an electric vehicle, considering the various tax incentives that are being offered as part of the EV tax credits. With the deadline fast approaching, many are looking to take advantage of these incentives. Always check with an authorized tax consultant for the most recent updates and which tax credits you may claim based on your personal and financial circumstances.
