Tax Credit for Electric Cars: 4 Things You Need to KnowMarch 13, 2023
There are many things you don’t know about tax credit for electric cars. Here are 4 things you need to know.
The US government introduced electric car tax credits to promote electric car industry. Thanks to the tax credit, the industry has grown and many of the manufactures have even sold over 200,000 units. Tesla and General Motors are the only manufacturers who have hit this milestone. Which electric cars qualify for electric car tax credit? How much is electric car tax credit worth? To help you answer these and other questions, here are 4 things you need to know.
- Qualifying electric vehicles must…
One thing you need to know is that this tax credit is for brand new electric cars bought from recognized manufacturers such BMW, Nissan and others. In addition to that, the vehicles must have a battery with a capacity of 4kWh or more. Also, you need to buy and use the vehicle in the USA for some time, so that you can claim the tax credit. Therefore, don’t by the vehicle and take it to Mexico immediately, and expect to qualify for the tax credit. Besides all that, you need to know that you can’t claim thetax credit for electriccars if you buy electric cars just to resell them.
- How much are electric car tax credits worth?
The amount you can claim for electric car tax credit will depend on the size of the car as well as the battery capacity. The highest tax credit for electric cars you can get is $7,500, but this tax is not refundable. Therefore, if the tax credit is more than what you owe the IRS, don’t expect a refund. But you need to note that the government is lowering and phasing out this tax credit gradually for electric cars and manufacturers making big sales every year.
- Can you get any tax credit for buying a Tesla car?
Right now, if you buy a Tesla car, you will not get any tax credit. This is because Tesla had sold over 200, 000 electric cars by the end of 2018. And according to the electric car tax credit terms, if a manufacturer has already sold 200,000 units, their electric cars won’t be eligible for the tax credit. Therefore, if you just bought a Tesla, we are very sorry, the car won’t qualify for the tax credit.
- If you lease an electric car, can you qualify for the tax credit?
As mentioned, electric car tax credit is to help encourage people to buy electric cars and promote the electric car industry. Leasing is not buying. Therefore, if you lease an electric car, you won’t get the tax credit. The tax credit will go for the owner of the car.
Many people are buying electric cars as they are economical and eco-friendly. When you buy a brand new electric car, you can claim an electric car tax credit come tax season. How can you claim the tax credit? It is very simple, just use H&R Block; an online tax filing software. With H&R Block, the whole process of filing your tax returns will be easier and cost-effective, compared to hiring a tax specialist.