The IRS reports that qualified buyers that purchase a car that falls within the qualification guidelines can take advantage of a non-refundable tax credit of $7,500. It’s important to note that this can be levied against your previous year’s tax filing or the current year, and any overage that it may create is not added into your refund (as it’s non-refundable). What this means, in a functional sense, is that the incentive can be leveraged for up to a tax break of $7,500 against your year-end tax calculation.
To qualify, there are few criteria that must be met. The IRS considers a qualified EV to include:
- A battery capacity of at least 7 kWh;
- A gross vehicle weight rating of 14,000 pounds or less;
- Be manufactured by a qualified manufacturer (see the above lists for this information, as well as the specific car makes that are included);
- Undergo final assembly in North America.
You must also purchase the vehicle ‘new’ and the MSRP set by the manufacturer must be less than the stated values above ($80,000 for vans, trucks, and SUVs, and $55,000 for all other vehicles).
As well, a buyer must meet a certain threshold of applicability in order to enjoy the credit. To be eligible, a buyer must:
- Intend to use the car themselves and primarily within the United States (the intension of resale or export will disqualify them);
- Report a modified adjusted gross income (AGI) of less than $300,000 for jointly filing married couples, $225,000 for heads of households, and $150,000 for all others filing their taxes.
The use of this credit can be applied to individual tax filings or those for a person’s business tax reporting.
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