Tax Credits for Electric Vehicle (EV) Purchases
With EVs becoming more efficient, more powerful, and more affordable – there’s never been a better time to make the switch to an all-electric vehicle. Regardless of what motivates your purchase, there are also a number of exclusive federal tax credits available specifically for electric vehicles. Intended to incentivize drivers to make the switch to an EV, these tax credits can make your next vehicle purchase that much more rewarding. Below, you’ll learn all about these credits, how you can qualify, and some other useful information surrounding EV tax credits. Let’s get started!
EV Charging Station Tax Credit Explained
It’s no secret that electric vehicles are beneficial to the environment since they produce zero emissions compared to a gasoline or diesel vehicle. Similarly, the widespread adoption of EVs helps to reduce our dependence on foreign oil producers. Another benefit is the fact that they can help support our domestic workforce and economy. As you can see, there are a number of reasons why the government would like to help incentivize more drivers to make the switch to an electric vehicle.
Recent legislature has expanded the federal EV tax credits, both in the amounts offered and for the number of vehicles that may potentially qualify. It’s important to remember that these savings come in the form of a tax credit, not a simple check from the government. For example, if you were to have an income tax liability of $3,500 and purchased a qualifying vehicle in a given year, that’s the amount you would be able to receive in the form of a credit. Conversely, if you were to have a $10,000 tax liability, you could potentially receive the full $7,500 credit. Any unused portion of the credit doesn’t roll over to the following year and cannot be used in any other situation. These numbers are used for illustrative purposes only and may vary*.
Which Electric Vehicles Can Qualify for Federal Tax Credits?
As of this writing, the US Department of Treasury has recently updated the criteria and requirements surrounding vehicles that qualify for federal tax credits. These updates have expanded certain segments of EVs and eliminated others. We’ll cover some of the general changes below but for the most up-to-date information, please click on the button below to see if a model that you’re interested in qualifies for tax credits.
- Your Adjusted Gross Income (AGI) must be at or below a specific threshold
- The MSRP of the vehicle must be at or below a specific threshold
- The vehicle must be assembled in North America
- The vehicle’s battery components must meet a specific percentage for content produced or manufactured in North America for the fiscal year that the EV was purchased
- The vehicle must meet the percentage for critical minerals extracted, processed, and/or recycled in North America or a country that the United States has a free trade agreement with
*Individual tax situations may vary. The information presented was accurate at time of publishing. Federal rules and tax guidelines are subject to change. Consult your tax advisor for complete details on rules applicable to your individual situation.