As the electric vehicle industry continues to expand in the US, some electric car users could be wondering if and how they could avail of the tax credit that may allow them to save much. For this, new information has come to light about which EVs qualify for a tax credit.
Here's What You Should Know About the Tax Credit Qualifications
Given that a number of extra incentives have recently been reestablished for US customers, and the sales of electric vehicles continue to soar in the market, uncertainty over their eligibility for the federal tax credit for electric cars plagues many new and potential electric car buyers.
According to a predetermined set of criteria, the possible quantity of savings that a family may get is different for each household. However, there is a possibility that you are missing out on one or more additional discounts that are accessible to you.
To help you maximize your green purchase, here is the necessary information regarding the tax incentive you must know about.
How can your EV qualify for a tax credit?
The US Department of Energy states that all EVs and plug-in hybrid cars bought new within the last 12 years (in or after 2010) could qualift for a federal tax credit costing up to $7,500.
The government may still give you a $7,500 tax cut in April, but you cannot tell for sure after buying a vehicle. This is due to the fact that the amount of your tax credit is determined by your income tax payment in addition to the size of the battery installed in your automobile.
One must understand the terms such as "may" and "up to" in government slips concerning the tax incentive. If you drive an electric vehicle, the federal government could be prepared to provide you with a tax credit that could range from $7,500. However, it is not at a flat rate as how it may seem.
The federal tax benefit would be $3,500, for instance, if you bought a Ford F-150 Lightning and paid $3,500 in income taxes this year. Your federal income tax liability must be at least $10,000 in order for you to be eligible for the full $7,500 credit.
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The Car Models that Could Avail the Tax Benefits
The Department of Energy provided the list of auto models that could qualify for the tax benefit. According to them, drivers may use the VIN decoder to check their vehicle identification numbers and see whether their cars are eligible or not.
The 2022 card models that could qualify are listed as follows:
- BMW 330e and X5
- Chrysler Pacifica PHEV
- Ford F Series
- Ford Escape PHEV and Mustang MACH E
- Ford Transit Van
- Jeep Grand Cherokee PHEV and Jeep Wrangler PHEV
- Lincoln Aviator PHEV and Corsair Plug-in
- Lucid Air
- Nissan Leaf
- Rivian EDV, R1S, and R1T
- Volvo S60
US prominent brands like Tesla are not included on the list despite being made in North America. This is for the reason that the carmaker has already exceeded the sales limit indicated by an ordinance from the past. However, when the new regulations concerning batteries take effect next year, the restriction for companies like Tesla will be voided.
Additionally, the GMC Hummer Pickup and SUV, and the Chevrolet Bolt EV and EUV are also unqualified to benefit from the tax break under the new inflation legislation.
Here's What Could Happen if the Car You Purchased was Delayed
CBS News reports that the IRS reassures all drivers who bought cars before August 16 (but had their purchases delayed by supply chain issues) need not worry. That's because the IRS would acknowledge a vehicle purchase before the new regulation if the buyer paid a deposit of at least 5% of the car's price.
The list of vehicles qualifying for credits will be significantly altered the following year in order to meet IRA standards for sources of battery production. All clients are recommended to watch out for the new list before year ends.
Related Article: Do the Current EVs in the Market Qualify for the Newly Expanded Tax Credits for Electric Vehicles?
