How Does the Federal Electric Vehicle Tax Credit Work?
Did you know that when you purchase an electric vehicle, you can earn up to $7,500 in tax credits a year? This is just one of the many perks that come along with owning an EV—consider it a thank you for helping keep emissions low and the road a greener place.
If you’re a driver in Cerritos, Irvine, Huntington Beach, San Diego, Vista, and West Covina, California, and asking yourself “how does the federal electric vehicle tax credit work?”, the team at Norm Reeves Superstore is here to help. In our guide, you’ll find out if you qualify and how to take advantage of this benefit today!
What is the Federal Electric Vehicle Tax Credit?
The EV tax credit is an incentive that encourages drivers to switch to greener, more environmentally friendly vehicles. When you do your part to lower emissions in your area, you can receive up to $7,500 in non-refundable tax credits a year—but do you qualify?
All battery-powered electric vehicles, as well as plug-in hybrid and fuel-cell models, may be eligible for this benefit. There are some restrictions, though. Along with the date you purchased the vehicle and the type of model you bought, other requirements include:
- A curb weight under 14,000 lbs
- A battery that is 4 kW or larger
- A battery that is externally charged
- The vehicle must be primarily driven in the US
Who doesn’t qualify for EV Tax Credits?
Aside from those who do not meet the regulations above, other electric vehicle drivers may not qualify for yearly federal EV tax credits.
Unfortunately, this includes individuals who have leased their electric model. You must purchase an electric vehicle to qualify, and the model must also be brand-new. Used or certified pre-owned electric vehicles are not eligible for these perks.
Additionally, make sure you check to see if the manufacturer is also eligible. Some brands no longer qualify for this program due to not meeting the criteria.
How to Get Your Electric Vehicle Tax Credits
To see if you meet the criteria for federal EV tax credits, you’ll need to complete and submit an 8936 form along with your yearly tax return. If you qualify, your tax credits will be applied to what you owe the IRS that year, saving you money!
As non-refundable tax credits, this is the only way they can be used. For example, if the EV tax credits are more than what you owe, you cannot claim the remaining balance of your credits like refundable tax credits.
Other Electric Vehicle Incentives
While you find the most credit available from the federal level, there are many other incentives you might qualify for as an electric vehicle driver. This includes local and state incentives such as:
- Registration and inspection fee exemptions
- Tax credits
- Reduced vehicle taxes
- Special carpool lane access
- And more!
Learn More About How Federal Electric Vehicle Tax Credits Work
Do you still have questions about the federal EV tax credit? Want to find a new electric vehicle so you earn these perks? Then contact Norm Reeves Superstore! Our team is always eager to help drivers in Cerritos, Irvine, West Covina, Huntington Beach, San Diego, and Vista, CA, with their EV needs.
Norm Reeves Superstore and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.