Am I Eligible For Tax Credits With This Car?
As the calendar year has come to a close, a lot of people are going to begin thinking about gathering up information and documentation for their taxes. If you bought an electric vehicle in 2022, you might be wondering about some of the details of the EV Tax Credit.
On the other hand, if you are looking ahead to 2023 and considering buying a new car, the newly named “Clean Vehicle Credit” might seem like enough of a reason to invest in an electric vehicle. If this is the case, we want you to know that these credits aren’t all dollar signs and quickly-cut checks.
This year, new credits have been reinstated for US consumers on electric vehicles, but not without their fair share of confusing and ever-evolving conditions. The Inflation Reduction Act, which will be in effect from 2023-2032 has made several changes to the credit. The new “Clean Vehicle Credit” allows for a maximum $7,500 credit, and comes with several stipulations.
For starters, consumers are only eligible for the maximum $7,500 credit if the vehicle they purchase is a new qualifying car. For those purchasing used EVs, the new rules only allow for a maximum credit of $4,000. Unfortunately, the qualifications are not just as simple as whether you are buying a new or used EV.
There are several stipulations that will affect your eligibility, and the degree to which you are eligible. These include, but are not limited to: where the vehicle had its final assembly, what percentage of the battery was assembled or manufactured in the U.S., and new requirements on the percentage of critical minerals used on battery production that were sourced or processed within the U.S.
Despite the long list of qualifications and processes required for the Clean Vehicle Credit, there are some positive changes that take effect in January of this year. Used vehicles are now eligible for the first time, and the manufacturing cap has been lifted, which means that credits no longer phase out for manufacturers who sell over 200,000 qualifying vehicles.
This post covers just the tip of the iceberg when it comes to the requirements to qualify for the new Clean Vehicle Credit. There are many positive aspects to owning an electric vehicle, and if you do your homework before purchasing, you may find that you will benefit even more as a recipient of the tax credit. That being said, be sure to ask questions, and rely on experts to determine if there are aspects of your purchase that will disqualify you from receiving the credit.