fbpx
Car News Updated Hourly

It Just Got a Whole Lot Easier to Claim the Federal EV Tax Credit

From the January 2024 issue of Car and Driver.

No one’s forcing you to buy an electric vehicle, but the government is certainly incentivizing consumers to do so. Starting January 1, 2024, buyers of eligible battery- electric and plug-in-hybrid vehicles can transfer the federal tax credit to participating dealers at purchase. Previously, EV and PHEV buyers could only claim the credit when filing their income taxes.

Now consumers can cut the purchase price of a new or used EV or PHEV by the equivalent credit for which a vehicle qualifies. That means as much as a $7500 discount on new EVs and PHEVs and up to $4000 (a max of 30 percent of the sale price) on used ones.

ev tax credit graph

An EV’s tax-credit eligibility in a given year requires that its battery use a minimum percentage of components built and assembled in north america and a minimum percentage of critical minerals that were recycled, extracted, or processed in north america or sourced from countries with which the u.s. has a free-trade agreement.

Car and Driver

Taking advantage of this on the consumer’s end simply requires that buyers fall below the maximum modified adjusted gross income (AGI) limits outlined by the IRS [see chart above]. If a buyer’s AGI for the year ends up exceeding the maximum allowed, they may have to repay the incentive amount. Also, unlike before, the IRS confirmed that being able to claim the full credit is no longer dependent on total tax liability.

Although the new year makes it easier than ever for consumers to apply the federal tax credit to an EV or a PHEV, it’s now more difficult for new vehicles to qualify for it.

Vehicles now must have at least 60 percent of their battery components manufactured or assembled in North America (up from 50 percent), and none can come from a designated “foreign entity of concern.” Also, to nab the full $7500 tax credit, 50 percent of the battery pack’s critical minerals (up from 40 percent) must be recycled in North America or extracted or processed in the U.S. or in a country with which the U.S. maintains a free-trade agreement. Meeting the requirements of either battery components or critical minerals, but not both, cuts the credit in half.

ev tax credit graph

Qualifying for the federal tax credit on an eligible new or used battery-powered vehicle depends on your adjusted gross income and how you file your taxes.

Car and Driver

Like last year, an EV or PHEV that is assembled outside of North America or has a battery capacity of less than 7.0 kilowatt-hours is automatically ineligible. Vans, SUVs, and pickups with a sticker price in excess of $80,000 and cars that top $55,000 are also disqualified.

Meanwhile, used vehicles remain bound by the same eligibility requirements as before. The credit is available only at the first title transfer of an EV or PHEV at least two model years older than the current calendar year. The vehicle must also have a battery capacity of at least 7.0 kilowatt-hours, a gross vehicle weight rating under 14,000 pounds, and a maximum sale price of $25,000.

Headshot of Greg S. Fink

Despite their shared last name, Greg Fink is not related to Ed “Big Daddy” Roth’s infamous Rat Fink. Both Finks, however, are known for their love of cars, car culture, and—strangely—monogrammed one-piece bathing suits. Greg’s career in the media industry goes back more than a decade. His previous experience includes stints as an editor at publications such as U.S. News & World Report, The Huffington Post, Motor1.com, and MotorTrend.



This article was originally published by a www.caranddriver.com . Read the Original article here. .

Subscribe To Our Email List

If you ain't first, you're last! Join to get the latest updates and exclusive offers!

Welcome to the club!

Something went wrong.