How To Get The 2023 EV Tax Credit And What Does It Apply To?

What Does The Inflation Reduction Act of 2022 Mean For my EV Tax Credit?

Are you an electric vehicle (EV) enthusiast? If so, the 2023 EV Tax Credit could be a great way to save some money.

This credit is available for anyone who purchases or leases an eligible electric car during this time frame. But what exactly does this tax credit apply to and how can you get it? In this article, we’ll explain everything you need to know about getting the 2023 EV Tax Credit.

The original Electric Vehicle Tax Credit was passed by Congress in 2008. It’s designed to help increase the adoption of EVs and make them more affordable for everyday drivers.

In order to take advantage of the current EV Tax credits available, there are certain steps you should take before making your purchase.

We’ll discuss these steps as well as other important information related to the 2023 EV Tax Credit so that you can maximize your savings when buying or leasing an electric car.

What Requirements Are In Place For North American Supply And Production?

To illustrate the requirements for North American supply and production of electric vehicles (EVs) when it comes to qualifying for the 2023 EV tax credit, let’s look at a case study.

The Electric Vehicle Inflation Reduction Act of 2020 was created in order to incentivize buyers to purchase EVs and reduce emissions.

This act requires that all cars manufactured in North America must be built with high quality standards in order to qualify for the tax credits.

Additionally, manufacturers are required to meet certain inflation reduction goals so as not to increase prices on potential buyers.

By adhering to these guidelines, automakers can ensure they will receive their portion of the 2023 EV Tax Credit while helping lower emissions and encouraging more people to buy electric cars instead of gasoline ones. With this incentive in place, consumers could have access to efficient and sustainable transportation options at competitive rates.

New 2023 EV Tax Credit Guidelines include:

Starting on August 16, 2022, all vehicles purchased up until 2032 must be assembled in North America (Canada, Mexico, or the United States).

Starting in March 2023, the $7,500 credit for new vehicles will be split into two parts. The amount of each part will no longer be based on the size of the battery, but instead there will be different criteria to receive each half of the total credit.

• Critical Battery Minerals (50%): In order to be eligible for the $3,750 credit beginning in March 2023, 40% of the critical minerals used in the battery must have either been recycled domestically or sourced from a U.S. mine (or any other country that has a free trade agreement with the U.S.). This percentage will increase incrementally each year; 50% required by 2024, 60% by 2025, 70% by 2026 and 80% by 2027.

• Battery Components (50%): Beginning in March 2023, an EV is eligible for a remaining $3,750 credit if at least 50% of its battery components are manufactured or assembled in the U.S. (or any other country that has a free-trade agreement with the U.S.). This percentage will increase every year: 60% in 2024-2025, 70% in 2026, 80% in 2027, 90% in 2028 and 100% by 2029.

If you’re thinking of buying an electric vehicle (EV) that is assembled in North America, but may not meet either or both battery requirements, rest assured that the full $7,500 tax credit will still be available until March 2023. This new rule was announced by the Treasury Department and will go into effect during their March update.

As of January 1, 2024, vehicles will be ineligible for certain standards if their battery components were sourced from a “foreign entity of concern,” such as China and Russia (as well as Iran and North Korea). On January 1, 2025, this exclusion will expand to include critical battery minerals. This is significant because China has been a major provider of these minerals up until now.

What Are the New Vehicle Prices And Buyer Income Levels?

The price limit for new SUVs, vans and pickup trucks is $80,000 and any other qualifying vehicle is no more than $55,000.

The income limits for purchasing a new vehicle are based on the modified adjusted gross income (MAGI). This figure is calculated by taking the adjusted gross income from either the current or previous tax year and adding back in certain allowable deductions. The thresholds of MAGI required to qualify for a new car purchase vary depending on filing status:

• Joint tax returns or surviving spouse: MAGI must be less than $300,000

• Head of household: MAGI must be less than $225,000

• Individual or any other filing status: MAGI must be less than $150,000

Does It Apply To EV And PHEV Leases?

Starting in 2024, the IRS defines the original user of a leased vehicle as the company that leased it to you (often the manufacturer). The tax credit goes to this leasing company, who are not obligated to pass on those savings to you but may do so – so it’s worth asking. This credit can be applied directly as a discount towards your lease payment.

This means that if you’re planning on getting a Porsche Taycan, you can qualify for the tax credit, regardless of whether you buy or lease it.

However, some states may also offer their own incentives in addition to this one. As such, if you want to take advantage of both state and federal tax credits when leasing your EV or PHEV, make sure to check what’s available in your area before signing any contracts.

Is There A Tax Credit For Used EV Models?

Starting on January 1, 2023, the rules for used EVs include a tax credit of either 30% of the vehicle’s value or $4,000 (whichever is less). However, many states offer incentives or rebates on the purchase of a used EV that can help offset some of the cost. In order for a used EV vehicle purchase to qualify:

Used Vehicle Price Limit:

• The maximum sale price for all used electric vehicles (EVs) is $25,000.

Used EV Vehicle Income Limits:

• For joint tax returns or a surviving spouse, the maximum Adjusted Gross Income (MAGI) must be no more than $150,000.

• For those filing as head of household, their MAGI must not exceed $112,500.

• All other filing statuses have a limit of $75,000 for MAGI.

EV Used Vehicle Credit Eligibility:

To be eligible for the used EV tax credit, the vehicle must be:

1. At least two model years older than the calendar year in which it is purchased.

2. Must purchased through a dealer.

3. Must be for personal use and not for resale.

4. Only an individual may claim this credit.

5. Once a buyer has taken the federal used EV credit, they will not be eligible to receive another one within three years.

List Of New Vehicles That Qualify For EV Tax Credits

As of February 3, 2023, the following vehicles qualify for a $7,500 federal EV tax credit because they are assembled in North America. The exact tax credit amount and list of eligible vehicles may change after March 2023 when the specific battery production requirements have been established.

It’s a good idea to double-check the build location of any vehicle you’re interested in, regardless if it is on the list or not. To do this, you can use a VIN decoder and look for the country name in the “Plant Information” field at the bottom of the page. Alternatively, you may check its window sticker if you have access to it.

Additionally, keep in mind that the vehicle must be purchased for its original use – meaning not for resale – in order to qualify for federal tax credit. Buying and immediately reselling it won’t allow you to benefit from such credit.

2023 Audi Q5 Plug-In Hybrid

2021-2023 BMW 3 Series Plug-In Hybrid

2023 Cadillac LYRIQ

2022-2023 Chevrolet Bolt EV

2022-2023 Chevrolet Bolt EUV

2022-2023 Chrysler Pacifica Plug-In Hybrid

2022-2023 Ford Escape Plug-In Hybrid

2022-2023 Ford F-150 Lightning

2022-2023 Ford Mustang Mach-E

2022-2023 Ford E-Transit Cargo Van

2022-2023 Jeep Grand Cherokee 4xe

2022-2023 Jeep Wrangler 4xe

2022-2023 Lincoln Aviator Plug-In Hybrid

2022-2023 Lincoln Corsair Plug-In Hybrid

2021-2023 Nissan Leaf

2022-2023 Rivian R1S

2022-2023 Rivian R1T

2022-2023 Tesla Model 3

2022-2023 Tesla Model Y

2023 Volkswagen ID.4

2022-2023 Volvo S60 Plug-in Hybrid

How To Claim Your Ev Tax Credit

If you’re purchasing an eligible electric vehicle in 2023, your tax representative should be knowledgeable about how to fill out the necessary forms. Additionally, if you are utilizing tax software, it will guide you through the process for claiming the credit when filing taxes in 2024. Starting from that year onward, you can choose to transfer the EV tax credit directly to your qualified dealer at the time of purchase as a discount on your car purchase instead of having to wait until tax season.

Steps For Claiming Your EV Tax Credits:

• First, gather all necessary documents associated with your purchase including receipts, invoices and proof that the vehicle was acquired new from a dealership.

• Second, complete IRS Form 8936 which will help determine if you are eligible for the tax credit as well as calculate the amount of credits you can receive. This form must be completed and submitted along with your annual income tax return when filing taxes.

• Third, check with your state government or local municipality to find out if there are any additional incentives or rebates that could reduce the total cost of purchasing an EV even more.

What If I Got My Ev Tax Credit Before The Inflation Reduction Act?

The Inflation Reduction Act was put in place to reduce the amount of EV tax credit available for certain vehicles purchased after December 31, 2021. But what if you already got your EV tax credit before then? The answer is simple:

Your credit will not be affected by the new law. You are still eligible for the full $7,500 federal tax break regardless of when you purchase your qualifying electric vehicle.

However, there are some caveats that come with claiming your EV tax credit before the Inflation Reduction Act was passed. First, it’s important to make sure that you have all necessary paperwork and documentation on hand in order to prove that you did indeed purchase an eligible electric vehicle prior to the act being signed into law.

Additionally, it’s also important to keep track of any changes made to state or local incentives as they may impact how much of a deduction you can claim. Finally, don’t forget to factor in any other applicable credits like those from utility companies when filing taxes for the year.

What If I Purchased An Qualifying Ev Before The Inflation Reduction Act Was Passed?

If you purchased a qualifying electric vehicle (EV) before the Inflation Reduction Act was passed, then you are still eligible to receive a tax credit.

These credits may be applied towards any federal income taxes owed for that year. This allows individuals who have already made the investment in a qualifying EV to get some relief from their taxes due.

If you purchased an eligible electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV) prior to August 16, 2022, the tax credit should still be applicable towards your 2023 income taxes even if that specific model is no longer on the approved list. Similarly, if you had a written binding sales contract prior to August 16 but take delivery of the vehicle in 2023, these older rules of the tax credit should still apply.

The federal incentive has often been referred to as a flat $7,500 credit; however, it will only reduce your federal tax bill up to $7,500 and any unused portion cannot be applied against future years’ taxes due to it being nonrefundable.

If you are leasing an EV, note that this tax credit goes directly to the manufacturer offering the lease instead of accruing for yourself. Additionally, some PHEV models may qualify for less than the full amount; with Toyota Prius Prime plug-in hybrid’s example qualifying for only a $4,502 tax credit.

Which Cars & SUVs Qualified For The Previous EV Tax Credit?

The previous section discussed purchasing an electric vehicle (EV) before the Inflation Reduction Act was passed. Now, it’s important to understand which cars and SUVs qualified for the previous EV tax credit.

The Internal Revenue Service listed many eligible vehicles that were released between January 1, 2018 and December 31, 2020. These range from passenger vehicles like sedans and hatchbacks to larger SUVs and trucks. Certain luxury models also qualify but only those with a base price of less than $60,000 are included in the list of approved EVs.

Generally speaking, any plug-in hybrid or all-electric car qualifies for the tax credit if purchased within this period. Depending on when you purchased your qualifying EV, you may be entitled to up to $7,500 back from the federal government as part of this incentive program.

List of EV Cars & SUVs That Previously Qualified For Federal EV Tax Credits:

• Audi e-tron GT

• Audi RS e-tron GT

• Audi e-tron SUV

• Audi e-tron Sportback

• Audi Q4 e-tron

• Audi Q4 Sportback e-tron

• BMW i4 eDrive40 Gran Coupe

• BMW i4 M50 Gran Coupe

• BMW iX xDrive50

• Ford Mustang Mach-E

• Ford E-Transit

• Hyundai Ioniq 5

• Hyundai Kona Electric

• Jaguar I-Pace

• Kia EV6

• Kia Niro EV

• Lucid Air

• Mazda MX-30

• Mercedes-Benz EQS sedan

• Mini Hardtop Electric

• Nissan Leaf

• Polestar 2

• Porsche Taycan

• Porsche Taycan Cross Turismo

• Porsche Taycan Sport Turismo

• Rivian R1T

• Rivian R1S

• Volkswagen ID.4

• Volvo XC40 Recharge

List of Plug-In Hybrids Cars & SUVs That Previously Qualified For Federal EV Tax Credits:

• Audi A7 Plug-in Hybrid

• Audi Q5 Plug-in Hybrid

• Bentley Bentayga Plug-in Hybrid

• BMW X5 Plug-in Hybrid

• BMW 3 Series Plug-in Hybrid

• BMW 5 Series Plug-in Hybrid

• BMW 7 Series Plug-in Hybrid

• Chrysler Pacifica Plug-in Hybrid

• Ford Escape Plug-in Hybrid Hybrid

• Hyundai Ioniq Plug-in Hybrid

• Hyundai Tucson Plug-in Hybrid

• Hyundai Santa Fe Plug-in Hybrid

• Jeep Wrangler 4xe

• Jeep Grand Cherokee 4xe

• Kia Niro Plug-in Hybrid

• Kia Sorento Plug-in Hybrid

• Land Rover Range Rover Plug-in Hybrid

• Lexus NX 450h+

• Lincoln Aviator Plug-in Hybrid

• Lincoln Corsair Plug-in Hybrid

• Mini Countryman Plug-in Hybrid

• Mitsubishi Outlander PHEV

• Porsche Cayenne Plug-in Hybrid

• Porsche Panamera Plug-in Hybrid

• Subaru Crosstrek Plug-in Hybrid

• Toyota Prius Prime

• Toyota RAV4 Prime

• Volvo S60 Plug-in Hybrid

• Volvo S90 Plug-in Hybrid

• Volvo V60 Plug-in Hybrid

• Volvo XC60 Plug-in Hybrid

• Volvo XC90 Plug-in Hybrid

Frequently Asked Questions

How Long Does The Ev Tax Credit Last?

In the United States, electric vehicle (EV) owners are eligible for a federal tax credit. But how long does this EV tax credit last? It’s an important question to consider when deciding whether or not to purchase an EV.

The current policy states that the EV tax credit applies until the manufacturer has sold 200,000 qualified EVs in the US market. This means that after this milestone is reached, manufacturers will no longer be able to offer their customers a federal tax credit on new sales of EVs made by them.

The good news is that some popular EV brands have already hit this mark and no longer qualify for the EV tax credit — but many others still do! For example, Tesla has already passed the 200,000-vehicle threshold; however, General Motors has yet to reach it.

So if you’re considering purchasing an EV from one of these qualifying manufacturers before they reach the 200,000-vehicle limit, then now may be a great time to take advantage of the sizable federal tax credit associated with buying an electric car.

Since most manufacturers have different timelines for reaching this milestone, it’s always worth checking with your dealer or doing research online to find out when your preferred brand will become ineligible for the tax break.

What Is The Maximum Amount Of The Ev Tax Credit?

The EV tax credit is an incentive offered by the federal government to help people purchase electric vehicles. The maximum amount of the credit available varies depending on a variety of factors, such as how many vehicles have been sold by a particular manufacturer and when they were made. It’s important to note that the EV tax credit only applies to new passenger cars, light-duty trucks, and motorcycles.

Currently, the maximum amount of the EV tax credit is $7,500 per vehicle purchased before December 31st 2023. After this date, it will begin phasing out for each manufacturer until it reaches zero in 2024.

However, if you buy an eligible vehicle after December 31st 2023 but before January 1st 2025, then you may still be eligible for a partial amount of the credit based on the start and end dates of your purchase or lease agreement. Furthermore, there are some additional restrictions regarding eligibility for those who pay taxes at certain levels or with certain credits or deductions.

In order to take advantage of this opportunity and receive up to $7,500 back in applicable taxes owed from your purchase price or lease payment for your electric vehicle (EV), make sure to consult with a qualified tax professional prior to making any decisions about purchasing an EV so that you can maximize your savings while staying within all applicable guidelines.

Is The Ev Tax Credit Refundable?

The question of whether the EV tax credit is refundable has been on many people’s minds.It turns out that for 2021 taxpayers filing as individuals, the maximum amount of the electric vehicle (EV) tax credit is $7,500. Unfortunately, this amount is typically not refundable.

A write-off is a tax deduction that reduces your taxable income, while the federal electric vehicle (EV) tax credit of up to $7,500 is a direct discount on taxes due. A $7,500 write-off would mean you pay $7,500 less in taxes than you would have otherwise; however, an EV tax credit provides much more savings since it’s effectively a handout for up to $7,500. To maximize the benefits when buying an EV, make sure to look into the list of state EV incentives maintained by the U.S. Department of Energy (DOE).

Can I Combine The EV Tax Credit With Other Tax Credits?

First, it’s important to understand that the electric vehicle (EV) tax credit allows you to subtract a certain amount from the taxes you owe on your federal income tax return. The exact amount depends on the type of car purchased and when it was bought. In general tax credits can typically be combined to reduce your overall taxable income.

For example, if you purchase an energy efficient car or install solar panels at home, both of these actions may make you eligible for additional government incentives that could reduce your total taxable income even further. Keep in mind though that there are specific eligibility requirements for each individual incentive program, so it’s best to do some research ahead of time before making any decisions about filing multiple returns.

Conclusion

The EV tax credit is an exciting opportunity to save money on the purchase of a new electric vehicle. This incentive lasts until 2023, so now’s the time to act! The maximum amount you can receive from this credit is up to $7,500.

Although the credit isn’t transferable, you may be able to combine it with other tax credits depending on your individual situation. To make sure you get the most out of this opportunity, consult a professional or research more online.

To summarize: if you’re looking for savings on your next electric car purchase, don’t let this chance slip away like water through fingers; take advantage of the EV tax credit before it’s too late! Its value is immeasurable in its ability to help reduce pollution and put money back into our pockets – a win-win situation that we should all strive towards achieving.