How to claim the IRS $7,500 tax credit for buying an EV
If you bought a plug-in electric or fuel cell vehicle this year, you may be eligible for a clean vehicle tax credit of up to $7,500. Here’s how to claim it.
The IRS offers a tax credit for buying an electric vehicle as an incentive to promote the use of more energy-efficient vehicles and lessen reliance on fossil fuels. Electric cars produce zero emissions, which helps to reduce air pollution.
The credit was created as part of the Energy Improvement and Extension Act of 2008 and is known as the Electric Vehicle Tax Credit. This allows taxpayers who purchase a qualifying EV to claim a credit on their federal income tax return of up to $7,500.
By offering a tax credit, the IRS aims to reduce the overall cost of purchasing an EV, making it more affordable and accessible to a wider range of consumers. This, in turn, could help to increase the demand for EVs and stimulate the market for cleaner, more sustainable vehicles.
The credit amount varies depending on the manufacturer of the car and the capacity of the battery pack in the EV. The credit begins to phase out once the manufacturer has sold a certain number of EVs.
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Who qualifies for the electric vehicle tax credit?
If you are an individual who bought a new plug-in electric vehicle or fuel cell vehicle this year, you and your business may qualify for the credit if you buy it for your own use and NOT to resell it. You should also use the car primarily in the United States.
Your gross income should not be beyond the following limits:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other tax filers
What vehicles qualify?
There are certain conditions that the car must meet to qualify for the credit.
- It must be bought new.
- Its battery must have a capacity of at least seven kilowatt hours.
- It must be made by a qualified manufacturer.
- It must have undergone final assembly in North America.
- Its manufacturer’s suggested retail price should not go beyond $80,000 for vans, sport utility vehicle, and pickup trucks; and $55,000 for all other vehicles.
How do I claim the electric vehicle tax credit?
Filing the right form (Form 8936), with your tax return is imperative if you are to claim the credit. You also need to submit your car’s vehicle identification number.