Sources: Plug In America, Electrek.co, IRS, FuelEconomy.gov
There’s no doubt there’s been plenty of confusion regarding the new tax credits for EVs. We’ve culled a number of sources for the most up to date information, so you can be well informed.
Keep in mind, manufacturers are continually making changes to take advantage of the new rules – or introduce sales incentives that match or beat them – so you’ll want to stay vigilant as you go car shopping.
Here’s the latest from Plug In America:
PURCHASE – Vehicle Requirements:
- Must be listed on FuelEconomy.gov website
https://fueleconomy.gov/feg/tax2023.shtml - MSRP limit on vehicle price
– $80,000 for SUVs, Pickup Trucks and Vans
– $55,000 for all other vehicles - Income limits:
– $300,000 for joint filers
– $225,000 for head of household
– $150,000 for single filers - Only one taxpayer can claim the tax credit
- Your tax credit can be signed over to the dealer, lowering the vehicle price. A certified dealer will give you a tax rebate document with your purchase papers.
- Must be purchased for personal use, not for resale
- Must be primarily used in the U.S
- Must be new
- Seller must report required information (your name, tax ID# and VIN) to you at the time of sale and to the IRS
- You WILL still be required to file the credit on your taxes, showing you transferred it to the dealer, using the document received at the dealership.
How The Credit Works
- $3,750 for minerals; $3,750 for battery components
- Applies to vehicles purchased on April 18, 2023 and onward
- Based on receipt of the vehicle, not the date you ordered
- Modified Adjusted Gross Income (MAGI) for 2023 or 2024 can be used
- Pricing based on MSRP, not extras like destination charges, taxes, fees
- Prior sales limits do not apply, so brands like Tesla and GM are eligible
Used EVs are eligible too!
The new law also allows up to $4,000 tax credit for a used EVs meeting eligibility requirements.
- Tax credit can be up to 30% of sales price, up to $4,000
- Must be listed on website:
https://fueleconomy.gov/feg/taxused.shtml - Vehicle sale price must be $25,000 or less
- Must be older than two model years (pre-2021)
- Must be sold by a dealer
- Income limits
- – $150,000 for joint filers
– $112,500 for head of household
– $75,000 for single filers- Your tax credit can be signed over to the dealer, lowering the vehicle price. A certified dealer will give you a tax rebate document with your purchase papers.
- Purchaser is eligible once every 3 years
- Must be purchased for personal use, not for resale.
- Can’t be the original owner of the vehicle.
- Can’t be claimed as a dependent on someone else’s tax return.
- Must be primarily used in the U.S.
- Each vehicle is only eligible for one tax credit
- Dealer must report required info to you and to the IRS.
- Businesses, non-profits, and fleets not eligible
The dirty little secret: Leasing!
Due to what is considered a loophole in the new law, virtually any EV can receive the full tax credit if it is leased through a commercial lessee. Many of the vehicles not subject to the purchase tax credit can receive it via this leasing method. A list of current brands and models eligible for the leasing credit are listed on this Electrek article.
Vehicles who do not qualify, such as the Kia EV6, the company is already changing incentives to match or beat the federal credit. But here’s how it stands right now:
- Must be made by a qualified manufacturer.
- Must be propelled by an electric motor of at least 7kWh and be able to charge
- The credit amount is the lower of:
- – 15% of the sales price for Plug-In Hybrids
– 30% of the sales price for all electric vehicles- Lessee will get the credit; make sure they pass it on to you, and that you receive your IRS document for tax filing!
Commercial EV Credit
With the advent of larger vehicles like the Tesla Semi, the bill also includes incentives for large-scale commercial vehicles users to benefit.
- Must be made by a qualified manufacturer and be able to charge from an external source of electricity
- Vehicles under 14,000 lbs: 7kWh motor
- Vehicles over 14,000 pounds: 15kWh
- Rebate maximum:
- – $7,500 under 14,000 lbs
– $40,000 over 14,000 lbs - Must be new
- Must not be acquired for resale.
- Only eligible for one tax credit.
- Must be used for business purposes.
- Seller must report required information to you and the IRS
I can’t stress it enough: the rules – and manufacturer’s moves to work around these restrictions – may change. So please double-check details before you sign on the dotted line.