For those of us whom the environmental movement influenced, now is the perfect time to change and switch to an electric vehicle. However, thanks to the Inflation Reduction Act, that decision became much more financially appealing. As of January 1st, 2023, consumers can receive up to $7,500 in tax credits when purchasing a new electric vehicle and $4,000 for a used one.
For drivers looking to make the switch, these credits virtually ensure that your next car will be an electric model. The federal government’s pro-EV stances are helping drive consumer demand and encouraging automakers to offer more choices than ever before. So what are you waiting for? 2023 could be the year you make the switch!
Eligibility for EV Tax Credits
The U.S. government recently revised the tax credit for electric vehicles in anticipation of a surge in demand beginning in 2023. While this credit could result in significant savings, it’s essential to understand precisely who qualifies for the benefit and what limits exist. The credit can be significantly lower than the advertised $7,500 depending on the electric or plug-in hybrid vehicle model and is subject to an income cap and other restrictions placed by congress that exclude some consumers from the benefit entirely. Consequently, car buyers should become familiar with their particular state and federal tax rules before maximizing their return on investment.
What Vehicles Qualify for EV Tax Credits
The expanded $7,500 federal electric vehicle (EV) tax credit is fantastic news for those looking to transition to a more environmentally friendly form of transportation. Unfortunately, this tax credit only covers some of the popular EV models on the market, including the Hyundai Ioniq, Kona Electric, and Nexo.
The U.S. Department of Energy has issued a list of more than 40 models that may meet the criteria for eligibility – such as the 2022 and 2023 Nissan Leaf, Tesla Models 3, S, X, and Y, Audi Q5, and Chevy Bolt EVs. However, only some models on that list will qualify for this incentive. This credit is the perfect way for drivers to save money while switching from traditional fuel vehicles to EVs; if you’re considering investing in an electric car this year, double-check whether you can be eligible for this tax relief.
Requirements for Used EVs
If you’re in the market for a used electric vehicle (EV), you should be aware of a few tax credit requirements.
- The income threshold is $75,000 for individuals and $150,000 for couples.
- The vehicle must be at least two years old from the year of purchase
- The used EV’s price can’t exceed $25,000.
However, if all these qualifications are met, the buyer could qualify for up to a $4,000 tax credit – or 30% of their purchase price (whichever is lesser). This is an incredible way to save on your next used electric car.
If you’re not in a hurry to buy an electric vehicle (EV), it’s worth the wait. You can take advantage of the used EV tax credit with fewer restrictions and less pressure on the makes and models. By waiting, you can explore different used EV options to get the best deal available, with no rush or pressure to make a decision.
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