There has been a lot of confusion about 2023’s new federal EV tax credit law. First of all, when it comes to the tax code, many of us find it beyond confusing. That is why a lot of people rely on tax professionals to help them prepare their annual tax returns. Well the new EV tax credit won’t disappoint you, it is extremely confusing.
So What Exactly Is The Electric Vehicle Tax Credit?
The electric vehicle tax credit is a nonrefundable tax credit. It is offered to taxpayers who purchase a qualifying new electric vehicle or plug-in hybrid vehicle. It can also be used on qualifying used electric vehicles. A nonrefundable tax credit will lower your tax liability by the credit amount. However, it can only be used to offset taxes owed. If you do not owe taxes and are receiving a refund, you can not use the tax credit. Taxpayers can only claim one credit per vehicle.
The new vehicle EV tax credit is worth up to a total of $7,500. It consists of a $3,750 tax credit for the battery requirement and a $3,750 tax credit for the critical minerals requirement. The new electric vehicle must meet several other qualifications in order to qualify the full EV tax credit.
You may also qualify for up to $4,000 tax credit on qualifying used electric vehicles. There is a maximum limit of 30% of the sales price of a used EV.
How Will I Know If I Qualify For The Tax Credit?
First, the vehicle you are purchasing must qualify for the tax credit. The vehicle must meet several criteria such as MSRP, final assembly requirements, and battery & critical minerals requirements. The IRS urges taxpayers to use its tool for the most up to date information on the tax credit and vehicle requirements. You can now consult the FuelEconomy.gov website for the latest information.
The purchaser of the electric vehicle must also qualify for the tax credit. The new law sets limits on the modified adjusted gross income for taxpayers in order to qualify for the tax credit. If both the vehicle and the taxpayer meet the requirements for the tax credit, you must file IRS Form 8936 with your tax return to claim the EV tax credit.
Wallace Hyundai Is Here To Help
Let the sales professionals at Wallace Hyundai of Stuart help answer any questions you may have on new or used electric vehicles and plug-in hybrids. You can also find answers to many of your questions at the Wallace Hyundai EV Education Center. Ready to explore a new or used electric vehicle, contact Wallace Hyundai today.
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