EV Tax Credit 2023
Electric vehicles are the new momentum in the automobile industry. The moment customers decide to save on fuel; they think of electric vehicles and see EVs eligible for tax credits. At that time, they want to know everything about tax credits and how they impact their buying decisions.
According to the Inflation Reduction Act, set in 2022, it is beneficial to purchase an electric vehicle with EV tax credits. With EV tax credits, it becomes possible for people to opt for more electric two-wheelers and four-wheelers.
If you are not cognizant of EV tax credits, read this post to learn more about it.
What is EV Tax Credit?
The US government provides an incentive to buyers of electric vehicles, which is a selective vehicle tax credit. This credit aims to help neutralize the huge amount of electric vehicles that further persuade people to prefer electric vehicles.
Buying EVs has its benefits for enhancing the environment. The primitive one is they have zero emissions and contribute nothing to greenhouse gases or pollution. Thus, it works effectively for humans to save on fuel and protect the environment simultaneously.
However, the EV tax credit does not apply to every used car. Also, you need to search for new scooters and cars on which tax credit is applied, especially the $7500 EV tax credit.
Electric vehicles must meet the new standards to qualify for the upgraded EV tax credit, worth up to $7500.
Electric Vehicles Tax Credit: How Does it Work?
It is essential to understand the EV tax credit after the inflation of the Reduction Act of 2022.
Those planning to purchase or have purchased EVs in 2023 must know that the Act of 2022 brought significant changes to federal EV tax credits for new vehicles.
The significant change includes the need for the final assembly of eligible vehicles that must take place in North America. Next, the $7,500 electric car tax credit splits into two parts with different requirements. If a certain percentage of battery minerals of your EVs are sourced from the United States or have a free-trade agreement with the US, you will get $3750. The remaining amount relies on the percentage of battery elements assembled or produced in the same countries.
Here are other highlights-
- Qualified electric vehicles must be assembled in North America.
- The MSRP price cap of New pickup trucks, SUVs, and vans is $80,000.
- The MSRP price cap of other qualifying new vehicles, such as sedans, is $55,000.
In 2024, it is expected that a new mechanism will permit buyers of electric vehicles to take the EV tax credit directly from the dealer at the point of sale instead of waiting for the next tax season.
Which Electric Vehicles qualify for a Tax Credit?
Here is the list of qualified Electric Car/Pickups for EV Tax Credit
Model | Year | Vehicle Type | MSRP Limit | Tax Credit Amount |
CADILLAC Lyriq | 2023-2024 | EV | $80,000 | Up to $7,500 |
CHEVROLET Blazer EV | 2024 | EV | $55,000 | Up to $7,500 |
CHEVROLET Bolt EUV | 2024 | EV | $55,000 | Up to $7,500 |
CHEVROLET Bolt EV | 2022-2023 | EV | $55,000 | Up to $7,500 |
CHEVROLET Equinox EV | 2024 | EV | $55,000 | Up to $7,500 |
CHEVROLET Silverado EV | 2024 | EV | $80,000 | Up to $7,500 |
Ford F-150 Lightning | 2022-2023 | EV | $80,000 | Up to $7,500 |
Ford Mustang Mach-E | 2022-2023 | EV | $80,000 | Up to $3,750 |
ford E-Transit | 2022-2023 | EV | $80,000 | Up to $3,750 |
Escape | 2022-2023 | PHEV | $80,000 | Up to $3,750 |
Pacifica | 2022-2023 | PHEV | $80,000 | Up to $7,500 |
RIVIAN R1T | 2023 | EV | $80,000 | Up to $3,750 |
RIVIAN R1S | 2023 | EV | $80,000 | Up to $3,750 |
Grand Cherokee PHEV 4xe | 2022–2023 | PHEV | $80,000 | Up to $3,750 |
Wrangler PHEV 4xe | 2022–2023 | PHEV | $80,000 | Up to $3,750 |
Tesla Model 3 Standard Range RWD/Long Range |
2022-2023 | EV | $55,000 | Up to $7,500 |
Tesla Model 3 Performance | 2022-2023 | EV | $55,000 | Up to $7,500 |
Tesla Model Y AWD/Long Range/Performance |
2022-2023 | EV | $80,000 | Up to $7,500 |
Model Y Performance Model Y AWD Model Y Long Range AWD |
2022-2023 | EV | $55,000 | Up to $7,500 |
Aviator Grand Touring | 2022–2023. | PHEV | $80,000 | Up to $7,500 |
Corsair Grand Touring | 2022–2023. | PHEV | $80,000 | Up to $3,750 |
VOLKSWAGEN ID.4 / ID.4 S | 2023 | EV | $80,000 | Up to $7,500 |
VOLKSWAGEN ID.4 Pro/Pro S/Pro S Plus | 2023 | EV | $80,000 | Up to $7,500 |
VOLKSWAGEN ID.4 AWD Pro/AWD Pro S/AWD Pro S Plus |
2023 | EV | $80,000 | Up to $7,500 |
However, many people have certain things to know about it. Here are a few questions that strike most of your minds. Have a look-
FAQs
Q. How does tax credit work for electric cars?
Ans. The Inflation Reduction Act 2022 revamped the Federal Electric Vehicle Tax Credit for the current incentives of up to $7500 in tax credits for chosen electric cars, hydrogen-powered vehicles, and plug-in hybrids that meet government qualifications are extended. The federal government updates the list of qualifying electric cars and other vehicles.
Further, the Act 2022 emphasizes caps on EV price tags. The incentives impede qualifying vehicles to low emissions SUVs, vans, and trucks with MSRP of up to $80,000 and cars up to $55,000.
Q. When do the federal tax credits for electric vehicles expire
Ans. The $7,500 EV tax credit is extended for ten years- until December 2032 for those EVs placed into service in 2023. The tax credit is received in the year you take delivery of the EV. So, the exact amount of the credit relies on a calculation that considers factors such as vehicle assembly and sourcing.
Q. How Do I Claim EV Tax Credit?
Ans. Customers buying a qualifying electric vehicle can claim the EV tax credit on their annual tax filing. In 2024, the Inflation Reduction Act sets a mechanism that will permit car buyers to transfer the credit to dealers during the sale to directly reduce the purchase price.