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Want to Get EV Tax Credits in 2024? Here’s How to See if You Qualify

The U.S. government is providing tax credits to help people buy new or used electric vehicles (EVs). But in 2024, the rules for these EV tax credits are changing. Let’s take a look at the new landscape of EV tax credits in 2024, and how you can buy an EV while saving money.

How to get new EV tax credits (up to $7,500) in 2024

Want to get EV tax credits for buying a new electric vehicle? The amount of tax credit you get will depend on a few factors.

Where the car and EV battery were made and sourced

The only new EVs that can get the full $7,500 tax credit in 2024 are vehicles with final assembly done in the U.S., and critical battery materials sourced from the U.S. or countries that have a free trade agreement with the U.S. Also, the electric vehicle’s manufacturer suggested retail price (MSRP) must be $80,000 or less for electric SUVs, pickup trucks, and vans, or $55,000 or less for other EVs.

Some EVs can get a partial tax credit of $3,750, while others get the full $7,500 amount. Some EVs that were eligible for EV tax credits in 2023 are no longer eligible in 2024. According to Inside EVs, prominent EV models like the Cadillac Lyriq, Chevrolet Equinox EV, Ford Mustang Mach-E, and some variants of Tesla Model 3 are losing eligibility for EV tax credits in 2024.

As a car buyer, you can shop online to see which electric vehicle makes and models qualify for EV tax credits. If the EV you want is eligible, the dealership will be eager to help you get the full amount of tax credits.

Your modified adjusted gross income (AGI)

The other factor that decides whether you can get a new EV tax credit is your income. Specifically, your modified adjusted gross income (AGI), or the number on line 11 of your 1040 tax return, before you subtract your standard deduction or itemized deductions.

To get a new EV tax credit, your modified AGI must be:

  • $300,000 or less for married couples filing jointly
  • $225,000 or less for heads of household
  • $150,000 or less for all other filers — single, married filing separately, or qualifying widow(er) with dependent child

You can use your modified AGI from the year you take delivery of your new EV, or the year before. For example, let’s say that you are a single person buying a new EV in February 2023, and your AGI for 2023 was $145,000. But for 2024, you expect to get a pay raise or promotion that could bump up your AGI over the limit. You can use your 2023 modified AGI to qualify for this new EV tax credit.

How to get used EV tax credits (up to $4,000) in 2024

What if you don’t have the budget for a new electric vehicle? No problem — you can get a used EV tax credit of up to $4,000, depending on the age, make, and model of your vehicle, and your income. The rules for qualifying for the used EV tax credit are a bit simpler. Let’s take a look.

Which pre-owned vehicles qualify for used EV tax credits

There are no “made in the USA” or battery sourcing requirements for the used EV tax credit. Instead, you just have to:

  • Buy your used EV at a dealership
  • Buy a used EV with a sale price of $25,000 or less
  • Buy a model year that’s two years prior than the current calendar year (or older)

The used EV tax credit is limited to $4,000 or 30% of the sale price, whichever is smaller. So if you buy a used EV for $10,000, you’ll only get $3,000 of tax credit. Some older EVs or plug-in hybrid vehicles are too old to qualify. For example, the used EV tax credit is only available for Toyota Prius Prime plug-ins from 2017-2022.

See the full list of used EVs that qualify for the tax credit at fueleconomy.gov.

Your modified adjusted gross income (AGI)

The used EV tax credit is also based on your income. To qualify, your modified AGI must be:

  • $150,000 or less for married filing jointly or a surviving spouse
  • $112,500 or less for heads of households
  • $75,000 or less for all other filers

You can use your current year’s AGI (the year when you take delivery of your vehicle) or the previous year’s, whichever is lower.

New for 2024: Get your EV tax credit at the dealership

One bit of good news for EV tax credits: Starting from Jan. 1, 2024, you can get your tax credit as an immediate discount right at the dealership. The dealer will file paperwork with the IRS and get reimbursed for the amount of the credit. But be aware that you’re still responsible for filing taxes; if your modified AGI is over the limit, you will have to pay money back to the IRS.

Bottom line: EVs are not cheap, and you still need to pay for costs like auto insurance. The costs of insurance for your EV could be higher than a gas-powered car. But you can save up to $7,500 on a new electric vehicle, or $4,000 for a used EV, in 2024. Do your research or ask the dealership which models qualify for tax credits, get price quotes from car insurance companies, and make sure your income is within the limits to avoid tax issues.

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

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