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IRS

$7,500 IRS Credit: Who is it for and how to apply

As part of the Inflation Reduction Act, the IRS is offering a $7,500 credit when you file, but who is it for and how do you apply? Here the details.

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Crédito de $7,500 IRS: A quiénes irá dirigido y cómo solicitar
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In an attempt to move the United States toward sustainability, the Internal Revenue Service (IRS) will offer a credit of up to $7,500 to all those looking to purchase an electric vehicle.

The credit is part of the Inflation Reduction Act passed by President Joe Biden in 2022. Through this legislation, the government allocates more than $370 billion in subsidies for technologies solar, wind and electric cars. The law went into effect January 1 and can be used to finance a new vehicle, as well as install solar panels or upgrade your electrical systems.

$7,500 IRS Credit: Who is it for and how to apply

In accordance with the provisions of the legislation, for a person to be eligible for a credit of up to $7,500 dollars they must have had an income less than $150,000 dollars in 2021, or $300,000 dollars for couples.

It is worth mentioning that the credit only covers electric vehicles with a value of up to $55,000 dollars or up to $80,000 dollars for trucks. While buyers can receive up to $7,500 of the credit, keep in mind that the benefit is gradually reduced for each requirement the car does not meet.

You can claim the credit through Form 8936 with your tax return. It is necessary to take into account that you must provide the VIN of your vehicle.

You may also be interested in: Tax season 2023: what are the federal tax brackets for this year?

Eligible Vehicles

According to the Department of Energy, 29 electric models were manufactured in the United States corresponding to 2022 and 2023 models, which belong to the brands Audi, BMW, Chevrolet, Chrysler, Ford, GMC, Jeep , Lincoln, Lucid, Nissan, Rivian, Tesla, Volvo, Cadillac, Mercedes and Volkswagen.

For a vehicle to be eligible, it must:

  • Have a battery capacity of at least 7 kilowatt hours
  • Have a gross weight class of less than 14,000 pounds
  • Be manufactured by a qualified manufacturer
  • The sale qualifies only if the vehicle is new. Sellers must report your name and tax identification number to the IRS.

The IRS provides a list of vehicles eligible for credit of up to $7,500 dollars from the IRS.

Vehicles purchased on or before 16 August 2022, may be eligible for a $7,500 tax credit as well. However, the eligibility requirements are different. After that date, a final assembly in North America requirement was added.

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