As an incentive to encourage the use of more energy-efficient automobiles and reduce dependency on fossil fuels, the IRS provides a tax credit for purchasing an electric vehicle. Electric vehicles have no emissions, which aids in the reduction of air pollution.
The Electric Vehicle Tax Credit was established as part of the Energy Improvement and Extension Act of 2008. This permits taxpayers who purchase a qualifying EV to receive a credit of up to $7,500 on their federal income tax return.
Who Is Eligible For EV Tax Credit?
If you purchase a new, qualified plug-in EV or fuel-cell electric car, you may be eligible for a credit of up to $7,500 under Internal Revenue Code Section 30D. (FCV).
Individuals and corporations can apply for credit. To be eligible, you must:
- Purchase it for personal use only, not for selling
- It is largely used in the United States
Furthermore, your modified adjusted gross income (AGI) cannot be greater than:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
You can apply your modified AGI from the year you purchase the vehicle or the year prior, whichever is less. You can claim the credit if your adjusted AGI is less than the threshold in one of the two years.
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What Kind Of Vehicles Are Qualified?
To qualify for the credit, the vehicle must meet specific requirements.
- It must be purchased brand new.
- Its battery must have a minimum capacity of seven-kilowatt hours.
- It must be manufactured by a reputable company.
- It must have been completed in North America.
- The manufacturer’s suggested retail price for vans, SUVs, and pickup trucks should not exceed $80,000, and $55,000 for all other vehicles.
If you want to claim the credit, you must include the correct paperwork (paperwork 8936) with your tax return. You must also provide your vehicle identification number.
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