No one can deny that Electric Vehicles (EV) are gaining speed (figuratively speaking…although we wouldn’t protest faster versions) in the global markets. While they may not have taken over the roads yet, they are popular enough to cause folks to turn their heads and start asking questions. One of the big questions, and even bigger bonuses, about EV’s is the federal tax credits that are available upon purchase. Everyone wants lower taxes, so why not buy an EV to balance that out? Well here’s exactly what you’ll need to know if you ever choose to jump on the EV bandwagon and “save the ozone layer,” as well as some cash at the end of the year.
How much can I get for an EV tax credit?
The amount that consumers receive in tax credits for EV purchases can be up to $7,500. Not all EV’s qualify for the full credit, however. It’s smart to look up and compare the differences in which model get’s what prior to your purchase. For example, the Chevrolet Spark EV is eligible for the full $7,500, but the Mercedes-Benz S500e will only get you up to $4,042. Why the difference, you ask? We’ll get into that next.
How it works…
EV tax credits are determined based on the battery size of the vehicle. Meeting the Energy Department requirements is key to getting the higher credits. There are limits to the tax credits as well. The full $7,500 is only for those who owe at least that much in taxes. The IRS will not refund you the difference if you don’t owe at least the full amount. The limitations continue as sales grow. Once the manufacturer sells 200,000 units, the credit decreases.
For those who look to lease an EV, you can still benefit indirectly through the system. The dealership holds ownership of the EV, so they receive the tax credit, however, the lease option is often reduced because of this bonus. For the gearheads out there with EV conversions, you’re outta luck. The IRS will not accept the conversion vehicles for tax credit status. Nice try though.
How about the fine print?
As with all good things, there’s lots of fine print and disclaimers for the tax credit. Don’t get us wrong, it’s not overly difficult to get the tax credit, just as long as you play by the rules. Check out the IRS’s statements and ask the dealership before you commit to the EV. Just remember that not all consumers or vehicles will qualify for the tax credits. When you’re seeking the tax credit, you’re dealing with the IRS…and we all know how difficult that can be. So, if you decide to go after the monetary benefits of eco-friendly driving, we wish you the best of luck on your endeavors!