You are currently viewing $7500 tax credit on EVs Explained | Its Impact on Buyer

$7500 tax credit on EVs Explained | Its Impact on Buyer

  • This tax credit is available for customers who bought an EV between Jan and March 2023
  • The text credit will phase out after helping 200,000 buyers purchase their electric cars
  • The benefit of this scheme will come to the buyer’s pocket in next year’s tax filing
  • The Govt. has put strict measures to filter out the true middle-class customers and serve the true purpose of this scheme.

President Biden set a goal of electric vehicles making up 50% of new vehicle sales in the u.s. by 2030. 

Back in August, the inflation reduction act set aside 370 billion dollars in spending for this clean energy. Now let’s break down how this money could land in your pocket if you plan on buying a new electric vehicle. 

January first, if you’re in the market for a new electric vehicle, you could get a tax credit for up to $7,500, or if you’re buying a used one up to $4,000. the credit is designed to spur ev sales and reduce greenhouse emissions. but a complex web of requirements is casting doubt on whether anyone can receive the full credit next year 

To qualify for the credit, 40% of your new car’s battery minerals will have to come from North America or a country with a U.S. free trade agreement. There’s also a cap on the buyer’s income, if you’re buying a new EV, you could not have a gross income above $150,000 if single and $300,000 if filing jointly, and $225,000 if your head of household. For used electric vehicles, buyers could not earn more than $75,000 if single $150,000 if filing jointly, and $112,500 if the head of household. Another restriction is the price of the car qualifies. new electric sedans cannot have a sticker price above $55,000. according to kelly blue book, the average electric vehicle currently costs over 65,000, 

So if you do qualify, how do you get the money? At first, it will be applied here. 2023 tax return, which you file in 2024, and then starting in 2024, consumers can transfer the credit to a dealership to lower the vehicle price at purchase. so at the end of the day of this tax credit is coming in 2023 

But who is eligible? there is one little loophole that I want to tell you about is that the treasury makes these roles come March. so if you buy an electric vehicle or use one between January and March that’s your best time to kind of get around these restrictions.