Posted by Fletcher Accounting and Tax Service Inc.

Things To Know About Electric Vehicle Tax Credit

Things To Know About Electric Vehicle Tax Credit

The national government and some states in the United States of America offer financial incentives like tax credits to new Electric Vehicle (EV) owners so as to lower costs of the electric cars. This is so done to reduce the financial burden on the new car owners hence, enabling them to get along with living. The amount of the Electric Vehicle (EV) Tax Credit according to the United States of America’s Internal Revenue Service (IRS) ranges from $2,500 to $7,500 depending on factors as the size of the electric vehicle and the capacity of the electric vehicle’s battery.

There are many things that are worth knowing about the Electric Vehicle (EV) Tax Credit offered by governments in the United States of America. Some are these are discussed below;

  • The Electric Vehicle (EV) Tax Credit applies to newly manufactured electric vehicles and to new owners or first time car owners. The Electric Vehicle (EV) Tax Credit of between $2,500 and $7,500 is to be enjoyed by those buying the electric vehicles so that the payment burden is not too much on them. It is worth noting that the Electric Vehicle (EV) Tax Credit is not enjoyed at the point of purchase but until tax returns is filed for the year.
  • The Electric Vehicle (EV) Tax Credit is a non-refundable. Many are used to taxes being refundable when tax returns are filed. Taxes are refundable when the taxpayer pays above what his or her tax as computed for the year of assessment is. The refund is used against the tax of the next assessment year. The Electric Vehicle (EV) Tax Credit is used to nullify the tax liability of the taxpayer for the year of assessment. Had the taxpayer a liability short of $7,500 and the taxpayer is qualified for Electric Vehicle (EV) Tax Credit of $7,500, the Electric Vehicle (EV) Tax Credit would be used to compensate for the tax liability only.
  • The taxpayer buying the Electric Vehicle (EV) is better positioned to enjoy and maximize the Electric Vehicle (EV) Tax Credit when it leases the Electric Vehicle (EV) to a leasing house. The leasing house take the Electric Vehicle (EV) Tax Credit of the taxpayer into consideration and builds the entire amount of the credit into the leasing agreement. The leasing house has a tax liability much more than the Electric Vehicle (EV) Tax Credit hence, the taxpayer enjoys full benefit of the credit.
  • Though the Electric Vehicle (EV) Tax Credit is seen as an encouragement for new owners to buy Electric Vehicles, in reality, it is a means of providing incentive to those that are capable of buying the car. The Electric Vehicle (EV) Tax Credit provides incentive and encouragement to those already capable of buying the Electric cars. The Electric Vehicle (EV) Tax Credit is not an enabler for everyone to become Electric Vehicle (EV) owners but serves as an encouragement for those that have and also, a push for those that were not prior considering owning an Electric Vehicle (EV).
  • The Electric Vehicle (EV) Tax Credit does not have expiring date. Rather, it phases out at the attainment of the set milestone. The milestones is that the electric vehicle manufacturer or producer must have delivered 200,000 (two hundred thousand) qualifying vehicles in the United States. Upon the satisfaction of this milestone, the Electric Vehicle (EV) Tax Credit of $7,500 would remain for that quarter and the next quarter. The Electric Vehicle (EV) Tax Credit would be slashed into two; $3,700 for the next two quarters after the first two quarter of delivering the milestone, and again slashed to $1,875 for the next two quarters until it is phased out.

However, to claim the Electric Vehicle (EV) Tax Credit, you have to fill the IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. Also, depending on where you live, you may be qualified for Electric Vehicle (EV) Tax Credit of your state. There might be monetary and non-monetary incentives ranging from vehicle rebates, to additional tax credits, to reduction in vehicle registration fees, to exemptions from high-occupancy vehicle lane, to some special low-cost charging rates, amongst others.

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