How the credit works for new and used EVs—also, see a list of qualifying cars.
The beginning of the new year means the start of a new electric vehicle tax incentive in the US. Until now, the IRS allowed taxpayers to claim a tax credit of up to $7,500 on a new plug-in vehicle, with the exact amount determined by the battery’s capacity in kWh. Additionally, the credit was designed to sunset once a manufacturer sold its 200,000th plug-in, although only Tesla and General Motors ever reached that milestone.
But the Inflation Reduction Act (IRA) of 2022 rewrote the plug-in vehicle tax incentives, and the new rules went into effect at the beginning of January. Now, the tax credit is for “clean vehicles” rather than plug-ins, and it covers fuel cell EVs, some plug-in hybrid EVs, and all battery EVs.
It’s a more complex beast now, however. The maximum tax credit is still $7,500, but to qualify, a vehicle must have a battery capacity of at least 7 kWh and a gross vehicle weight rating of less than 14,000 lbs, and it must have undergone final assembly in North America. There are price caps—vans, SUVs, and pickup trucks can’t cost more than $80,000, and other vehicles must stay under $55,000 to qualify. There are income caps, too: $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other tax filers.
And like before, it’s a tax credit, which means you need to have at least as much tax liability as the credit during the year when the car was bought. If your total federal tax liability for the year is less than $7,500, you can only claim as much credit as that liability.
There are also tax credits for commercial clean vehicles, used clean vehicles, and leased vehicles. We’ll explain how those work later in this article.
Almost guarantee a tax on gas vehicles is coming, if this dumbass stays in. We have a liberal governor now too. He looks like a pawn too.
This new governor is a gigantic mistake!