Electric Vehicle Tax Credits

by | Nov 9, 2023 | Tax

If you are looking into getting an electric vehicle (EV) there are multiple opportunities for tax credits and savings. The credits can be confusing and overwhelming but listed below are the different credits and restrictions on them.

Buying New Electric Vehicle

If you purchased vehicle between 8/16/22 and 12/31/22 but didn’t not take delivery until 2023 you will follow the 2023 and after rules.

Vehicles bought 2022 or before

  • Eligible for up to $7500 ($2,917 if the vehicle’s battery capacity is 5kWh, Plus $417 for every kWh of capacity over 5)

Rules

  • Must be bought for use not resale
  • Used Primarily in U.S.
  • Vehicle must have external charging source
  • Vehicle must weigh less than 14,000 pounds
  • Manufacturer of vehicle has not sold more than 200,000 Electric Vehicles in U.S.

 

Vehicle bought 2023 or after

  • Vehicles placed in service 1/1/23 to 4/17/23
    • Eligible for up to $7,500 ($2,500 base amount, Plus $417 for vehicle with 7 Kwh, Plus $417 for each kWh over 5)
  • Vehicles placed in service 4/18/23 or after
    • Eligible for up to $7,500 ($3,750 if the vehicle meets critical minerals requirements, $3,750 If vehicle meets battery components requirements)

Rules

  • Must be bought for use not resale
  • Used primarily in U.S.
  • Buyer must not exceed Adjusted Gross Income (AGI) limits
    • $300,000 Married, Filing Joint
    • $225,000 Head Of Household
    • $150,000 Others
  • Vehicle has battery capacity of 7 kWh
  • Vehicle weighs less than 14,000 pounds
  • Vehicle made by a qualified manufacturer
  • Vehicles final assembly in North America
  • Vehicle meets critical mineral and battery component requirements
  • MSRP of Vehicle can’t exceed $80,000 for Vans, SUV’s, and Trucks or $55,000 for other vehicles

 

For new vehicles, click the link below to check if you vehicle or the vehicle you are considering qualifies.

https://fueleconomy.gov/feg/tax2023.shtml

 

Buying Used Electric Vehicle

Beginning in 2023 if you buy a used vehicle from a licensed dealership and receive a credit of up to $4,000 (30% of the sales price)

Rules

  • Vehicle is $25,000 or less
  • Vehicle is for use, not resale
  • You can’t be the original owner
  • You can’t be claimed as a dependent on anyone else’s tax return
  • You have not claimed another clean vehicle credit in the 3 years before purchase
  • You must be under AGI limits
    • $150,000 MFJ/SS
    • $112,500 HOH
    • $75,000 all others

 

For used vehicles, click the link below to check if you vehicle or the vehicle you are considering qualifies.

https://www.fueleconomy.gov/feg/taxused.shtml

 

Leasing an Electric Vehicle

 

There is a section in the tax law for the credit that allows a $7,500 credit for commercial vehicles. This credit will go to the dealership that leases you the vehicle. This is because you are not actual purchasing the vehicle yourself. It is possibly the dealership can give you a form of discount because of this credit but remember the credit goes to the dealership, not you.  

 

Always remember, Senter, CPA is here for you if you need any assistance.

Don't hesitate to give us a call at 248-934-0550, or contact us below.

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