Electric cars are slowly but surely finding their ground in the highly competitive auto industry. That’s because they are not only eco-friendlier, but also offer lower cost of ownership compared to traditional gas or diesel powered vehicles. That, however, is not the end of their perks. Besides causing much less pollution and offering lower running cost, electric cars also entitle buyers to receive tax credit. If you are unaware about electric car tax credit, this article is for you. Read on as we present all you need to know about electric car tax credit.
What is an EV Tax Credit?
In 2008, the Federal government declared tax credits of up to US $7,500 on the purchase of electric and plug-in hybrid vehicles, which used to be the norm until August 16, 2022, when the Inflation Reduction Act was approved, after which there have been some changes in the tax credit system and many cars that were earlier ineligible for tax credit are now eligible, including used electric vehicles.
Tax Credit for New Electric Vehicles
The buyers of eligible electric vehicles are entitled to receive a tax credit of up to $7,500, which is applicable until the end of 2023. The buyers receive the credit when they file their taxes the following year. After 2024, however, the buyers will be given the tax credit at the time of purchase. The tax credit applies to all “clean vehicles,” which means that hydrogen fuel-cell vehicles also qualify for it, besides eligible electric and plug-in hybrid vehicles.
Tax Credit for Used Electric Vehicles
Buyers of used electric and plug-in hybrid vehicles are entitled to receive a tax credit of up to US $4,000 or 30 percent of the car’s price, whichever is less. To qualify for a tax credit, the car must be at least 2 years old and its price should not be more than US $25,000. In addition, the credit can be claimed only once in the vehicle’s lifetime. The car should be bought at a dealership, as private sales are excluded in the tax credit system.
The Last Word
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