Blog post
Up to $7,500 Tax Credits for certain Electric Vehicles purchased in 2023 or after.
IRS announced new tax credits for Electric Vehicles purchased in 2023 or after.
There are 5 steps to find out credit eligibility:
Step 1: Purchase of a Vehicle.
- Credit applies to new vehicles only;
- The seller reports required information to the taxpayer at the time of sale and to the IRS (sellers are required to report taxpayer's name and taxpayer identification number to the IRS);
Step 2: Vehicle Use.
- This credit is available for individuals and their businesses;
- The vehicle must be for taxpayer's own use and be used primarily in US;
Step 3. Vehicle Requirements.
- Vehicle must be a plug-in EV or fuel cell electric vehicle (FCV);
- Vehicles must:
- Have a battery capacity of at least 7 kilowatt hours;
- Have a gross vehicle weight rating of less than 14,000 pounds;
- Have undergone final assembly in North America; and
- Not exceed a manufacturer suggested retail price (MSRP, excluding delivery fees) of
-
- $80,000 for vans, sport utility vehicles and pickup trucks;
- $55,000 for other vehicles;
More details on manufacturers can be found here.
To check the assembly requirements, go to Department of Energy's page and enter you VIN under "Specific Assembly Location Based on VIN".
Step 4. Taxpayer's income limitation.
Now, let's talk about your AGI limitation to qualify for this credit.
Taxpayer's modified adjusted gross income (AGI)* may not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
* Modified AGI from the year taxpayer takes delivery of the vehicle or the year before, whichever is less.
Step 5. Credit specifications.
Please note, this credit:
- maximum is $7,500;
- is nonrefundable (so a taxpayer cannot get back more on the credit than he/she owes in taxes);
- doesn't carryback or forward (the excess credit cannot be applied to future tax years);
I hope this was helpful for folks who are planning on purchasing EVs.
