How to Benefit from the Electric Vehicle Tax Credit?

The Electric Vehicle Tax Credit (commonly known as the EV or EV Tax Credit) has been gaining great attention lately.

In October, the Internal Revenue Service (IRS) issued new guidelines that allow you to get tax credits for cash at the store when you buy an electric car or gasoline car or truck.

Before these changes, you had to wait until tax time to claim the EV tax credit. There is a big problem with this arrangement. Because the electric vehicle federal tax credit is non-refundable, some taxpayers may receive a partial credit or no credit when they file, depending on the amount of tax they owe.

Here’s how things work after the Electric Vehicle Tax Credit changes.

What is an Electric Vehicle Tax Card?
The electric vehicle tax is part of former President Barack Obama’s Energy Recovery and Promotion Act of 2008. The Inflation Reduction Act of 2022 makes significant changes to the tax credit, changing the rules for vehicles and eligible taxpayers, and continuing through 2032. One of the big changes is that previously owned cars are now eligible for tax credits.

How Does the Electric Vehicles Tax System Work?
First of all, your electric vehicle must meet the guidelines in order to be included in the Electric Vehicle List. You can check the Department of Energy website to see if your vehicle qualifies. You then need to meet other requirements depending on whether the vehicle is used or new.

Get Electric Vehicle Tax Credits for New Cars
For new cars, you can claim up to $7,500 in subsidies to purchase necessary electrical appliances or electric fuel. You must purchase the vehicle for personal use (i.e., not for sale) and use it primarily in the United States.

Also, your income must be below a certain limit. In 2023, you may qualify for the EV tax credit if your adjusted gross income (MAGI) is below the following levels:

$300,000 for a married couple or single widow
$225,000 for Head of Household
All other documentation $150,000 for
You can use your income in the year you own the vehicle or in the previous year, whichever is lower. As long as your MAGI is below the limit in one of the two years, you can claim the credit.

Get Electric Vehicle Tax Credits for Used Cars
The IRS now allows you to claim up to $25,000 in EV tax credits when you purchase an electric vehicle in the past. But the tax credit works differently for used cars. You can request a credit of up to $4,000 or 30% of the purchase price, whichever is lower.

If you are not the original owner of the vehicle and did not purchase the vehicle, you may be eligible to receive an Electric Vehicle Credit Card when selling the vehicle. However, the seller must register the vehicle and report the same information to the IRS.

Under the new electronic vehicle tax credit, you must meet IRS income requirements. You can choose to use this year’s MAGI or last year’s MAGI to qualify.

$112,500 for head of households
$75,000 for all other filers
three years.

Year, make and model of vehicle
Vehicle identification number
Date vehicle was placed in service
Purchase cost
Related: Most Affordable Electric Cars Of 2023

Starting in January 2024, you can get the EV tax credit of up to $7,500 right away, without waiting to claim it when you file your tax return.

Before the IRS changes, taxpayers would have to wait until tax time.

If you want to get the tax credit sooner but are no longer eligible, you must pay back the credit as additional taxes on your tax return.