Tax Credit for New and Used Electric Vehicles: What Will Qualify?

The new Clean Vehicle Credit, a federal tax credit to make new and used electric vehicles - EVs - more accessible and affordable, may be confusing. Here, we will discuss some highlights of this tax credit that can also be used as a rebate when purchasing certain electric or plug-in hybrid vehicles.

What's Changed from the Previous Electric Vehicle Tax Credit? 

First, this federal credit has been extended to 2032. However, there are evolving changes, so it's always best to double-check at the time of purchase. Also, things are slightly different for EVs purchased through the rest of 2022 and 2023. 

The new credit emphasizes keeping car manufacturing in the US. All electric vehicles must be assembled in the US, and the battery components and materials must be sourced and manufactured in the US.

• Income requirements apply whether buying a new or used vehicle: An individual must make less than $150,000 income if they purchase a new EV. If you file as the head of household, the limit is $225,000, and up to $300,000 per year for married, filing as joint filers.
• When buying a USED EV, which means over two years old, the numbers are $75K, $112.5K, and $150K for joint filers.
• The credit may be as much as $7500 if requirements are met, including final assembly in the USA. The credit may be applied only once per vehicle. Manufacturers previously limited in the number of eligible EVs will see that restriction end in Jan 2023.
• The price of the car must be under $55,000 for a new vehicle and under $25,000 for used vehicles. 
• Things change after 2022. Changes are a big reason to double-check any individual vehicle before committing to purchase. 
•  For the remainder of 2022 and the beginning of 2023, only about 30 models qualify for these credits. You can find the list at the Department of Energy.

To Go Green, You Need a Home Charging Station

Unless you plan on parking at a charging station, you may need to install a charging station at home. Therefore, you need to include these costs and conveniences before purchasing.

Make a Smart Choice with Myrick, CPA

You may be eligible for state credits or credits from your power company. But first, you need someone who understands this green purchase's financial repercussions and benefits. If your income meets the threshold, can you afford the vehicle? Why not sit down and discuss the details with a professional who understands financial management? 

Contact Myrick, CPA, for peace of mind as you make your buying decision.