Sales of electric (and hybrid) vehicles are skyrocketing, leaving many new and prospective customers questioning which EVs qualify for the federal tax credit. The tax credit amount varies by household due to several factors, including whether the vehicle was manufactured in the United States, your income tax, and more.
The IRS states, “You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified, plug-in EV or fuel cell electric vehicle (FCV).” The inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased between 2023 and 2032.
The federal tax credit is enticing, but it’s important to understand that you may not qualify for the full amount. For example, if you purchased a qualifying vehicle but owe $3,500 in income tax for the year, you will receive this as your federal tax credit. However, if you owe $10,000 in federal income tax for the year, you will qualify for $7,500. Unused portions are not available for refunds or applicable for next year’s taxes.
To qualify for the new federal tax credits in the Inflation Reduction Act, electric vehicles must be assembled in North America, must have at least 40 percent of its critical battery minerals and 50 percent of its battery components originating from the United States or countries with a free trade agreement with the United States. EVs must also have a battery size of at least seven kWh and a gross vehicle weight of less than 14,000 pounds.
For vehicles priced below $25,000, a new federal tax credit of $4,000 has been implemented. For EVs with an MSRP below $55,000, the revised credit applies and also includes zero-emission vans, SUVs, and trucks with MSRPs up to $80,000. Individuals reporting adjusted gross incomes of $150,000 or less, $225,000 for heads of households, or $300,000 joint filers will qualify for the EV tax credit. The tax credit also applies to plug-in hybrid EVs (PHEVs) as long as they meet the requirements above.
Here is a list of vehicles that qualify for the full tax credit in 2022 – 2023:
– Cadillac Lyriq
– Chevrolet Bolt EUV and EV
– Ford F-150 Lightning, Mustang Mach-E, and E-Transit
– Nissan Leaf SV, S Plus, SL Plus, S, and SV Plus
– Rivian R1T and R1S
– Tesla Model 3 RWD/Long Range and Model Y AWD/Long Range/Performance
– Volkswagen ID.4, ID.4 S, ID.4 Pro, and ID.4 Pro S
– Audi Q5 TFSI e Quattro
– BMW 330 e and X5 xDrive45e
– Chrysler Pacifica Plug-In Hybrid
– Ford Escape Plug-In Hybrid
– Jeep Grand Cherokee 4xe and Wrangler 4xe
– Lincoln Aviator Grand Touring and Corsair Grand Touring
– Volvo S60 Recharge/Extended Range and S60 T8 Recharge Extended Range
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Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/