Electric and fuel cell vehicles (FCVs) are growing in popularity as more people turn to renewable energy to save on rising gas prices. If you’re thinking of buying an electric car, now may be the best time. Ford’s new hybrid pickup starts at his less than $20,000.
The Internal Revenue Service (IRS) recently updated the list of people who qualify for tax credits if they buy an EV. The growing list comes after initial confusion over who was included in the recent rule change.
Find out if you’re eligible for tax credits of up to $7,500 and which vehicles are currently included.
here’s the inside story
With the purchase of a new eligible plug-in EV or fuel cell electric vehicle (FCV), you are eligible for up to $7,500 in credit under Internal Revenue Code Section 30D. The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased between 2023 and 2032.
There was confusion when the rule change was announced. For example, certain vehicles that were eligible for the tax credit in 2022 may not be eligible in 2023.
Credits are available for individuals and their businesses. To qualify, you must:
- Purchase a qualifying vehicle for your own use and not for resale purposes.
- Using covered vehicles primarily in the United States
Further, the adjusted adjusted gross income (AGI) cannot exceed:
- $300,000 When a couple applies jointly.
- $225,000 For householders.
- $150,000 For all other filers.
Note: Modified AGI can be used from the year of delivery or the previous year, whichever is less. Credits can be claimed if the corrected AGI falls below the threshold in any of his two years.
Changes to the EV tax credit
So far, the new law includes:
- The 200,000 vehicle cap on the tax credit, which originally disqualified many popular models from Tesla, Toyota and GM, has been lifted.
- Vehicles not assembled in North America are not eligible for credit. These include the BMW i4, Hyundai Ioniq 5, Kia EV6, and Subaru Solterra. Note: This rule may not apply if the vehicle is leased.
The Internal Revenue Service says the $3,751 to $7,500 tax credit depends on battery size and other criteria, such as not exceeding the manufacturer’s suggested retail price (MSRP).
Here are some of the vehicles eligible for the tax credit:
- Audi Q5 TFSI e Quattro PHEV SUV (MSRP $80,000 or less).
- BMW 330e Sedan (under MSRP $55,000).
- BMW X5 xDrive45e SUV (under MSRP $80,000).
- Chevrolet Bolt and EUV hatchbacks (under MSRP $55,000).
- Chrysler Pacifica PHEV minivan (under MSRP $80,000).
- Ford Escape PHEV SUV (MSRP $80,000 and under).
- Ford F-150 Lightning Pickup Truck (under MSRP $80,000).
- Nissan Leaf S, S Plus, SL Plus, SV, and SV Plus hatchbacks (under MSRP $55,000).
- Tesla Model 3 rear wheel drive (under MSRP $55,000).
What you want to be careful about is the purchase price of the vehicle. Vehicle manufacturer’s suggested retail price (MSRP) cannot exceed $80,000 for vans, sport utility vehicles, and pickup trucks, and $55,000 for other vehicles. Tesla recently slashed prices on some of its vehicles, presumably to qualify for those tax credits.
To claim your credit, please submit Form 8936, Qualified Plug-In Electric Vehicle Credits (including Qualified Two-Wheel Plug-In Electric Vehicles) with your tax return. Must provide his VIN of the vehicle.
Learn more about tax deductions here.
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