The federal tax credit for electric vehicles (EVs) has undergone recent changes, rendering the information in this article outdated. To access the most up-to-date details regarding EV tax credits, please refer to the latest news on the subject. However, if you’re in the process of shopping for an electric vehicle or conducting research on the topic, it’s likely you’ve encountered discussions about EV tax credits, particularly the $7,500 federal tax credit available for eligible electric cars. In this article, we aim to provide insight into the EVs that currently qualify for this federal tax credit and explain how the credit works.
Eligible Electric Vehicles
Let’s begin by exploring the electric vehicles that are presently eligible for the full $7,500 tax credit. To qualify for the credit, these vehicles must be battery-electric or plug-in hybrid electric cars and must be purchased as new vehicles, not leased. The following is a list of eligible vehicles by manufacturer, presented in alphabetical order. All-electric vehicles are denoted as “EV,” while plug-in hybrid electric vehicles are labeled as “PHEV.”
Audi
E-Tron (EV)
E-Tron Sportback (EV)
E-Tron SUV (EV)
A7 TFSI e Quattro (PHEV)
Q5 TFSI e Quattro (PHEV)
Bentley
Bentayga Hybrid (PHEV)
BMW
i4 (EV)
ix (EV)
X5 xDrive45e (PHEV)
Chrysler
Pacifica Hybrid (PHEV)
Ford
Mustang Mach-E (EV)
E-Transit (EV)
F-150 Lightning (EV)
Honda
Clarity Plug-in Hybrid (PHEV)
Hyundai
Ioniq 5 (EV)
Kona EV
Genesis
GV60 (EV)
Jaguar
I-Pace (EV)
Jeep
Wrangler 4xe (PHEV)
Grand Cherokee 4xe (PHEV)
Kia
Niro EV (EV)
EV6 (EV)
Land Rover
Range Rover (PHEV)
Range Rover Sport (PHEV)
Lexus
NX (PHEV)
Lucid
Air (EV)
Mazda
MX-30 (EV)
Mercedes-Benz
EQS (EV)
Mini
Cooper SE Hardtop (EV)
Nissan
Leaf (EV)
Polestar
1 (PHEV)
2 (EV)
Porsche
Cayenne (PHEV)
Panamera (PHEV)
Taycan (EV)
Rivian
R1T (EV)
R1S (EV)
Subaru
Solterra (EV)
Volkswagen
ID.4 (EV)
Volvo
S60 Recharge (PHEV)
S90 Recharge (PHEV)
V60 Recharge (PHEV)
XC40 Recharge (EV)
XC60 Recharge (PHEV)
XC90 Recharge (PHEV)
It’s worth noting that some manufacturers and models may no longer be eligible for the federal tax credit. For instance, Tesla vehicles and the GMC Hummer EV no longer qualify for this credit.
When a manufacturer sells its 200,000th qualified vehicle, the federal tax credit for electric vehicles (EVs) is scheduled to gradually reduce. Initially, the credit is reduced by half to $3,750 and then continues to halve over time until it eventually expires. Tesla reached the 200,000-vehicle threshold in 2018, and the credit expired completely at the end of 2019. Similarly, the Chevrolet Bolt EV and larger Bolt EUV are no longer eligible for any tax credit.
The list of eligible EVs includes various models, ranging from practical city cars like the Nissan Leaf, premium hatches like the Mini Cooper SE Hardtop, to luxury SUVs such as the Jaguar I-Pace, Audi E-Tron, and Porsche Taycan. Additionally, buyers of new and upcoming models like the Rivian R1T pickup truck can also qualify for the credit. The Department of Energy maintains a comprehensive list of eligible EVs, and the IRS website also provides another list.
To claim the federal EV tax credit, you need to purchase a new and eligible EV. After the purchase, you must complete IRS Form 8936 to apply for a credit of up to $7,500.
It’s important to note that the credit amount is “up to” $7,500 because it depends on the taxpayer’s eligibility. The credit is nonrefundable, meaning it reduces your tax liability dollar for dollar. If your tax liability is lower than the credit amount, you won’t receive the remaining credit. For instance, if your tax liability before applying the credit is $4,000, your tax bill will be reduced to $0, but you won’t receive the extra $3,500.
The nonrefundable tax credit cannot directly increase your tax refund or reduce your tax liability below $0. However, it could lead to a higher refund when considering other factors like tax withholding. For example, if a taxpayer has a tax liability of $20,000 and has exactly $20,000 withheld, they would be due a refund of $7,500. On the other hand, if the taxpayer’s tax liability is $6,000 and the total withholding is $6,000, they would be entitled to a refund of the full $6,000. It’s advisable to consult with a tax professional to understand how the tax credit will apply to your specific financial and filing situation.
The income needed to have a tax liability of $7,500 varies depending on filing status. Assuming only a standard deduction and no other credits, a single filer would need an income of $65,964 in 2021 (up from $65,627 in 2020) to reach that tax liability. Head-of-household filers would need to have made $78,818 in 2021 (up from $78,432 in 2020), and married couples filing jointly would require combined incomes of $90,920 in 2021 (up from $90,592 in 2020). However, it’s recommended to consult with a tax professional for personalized advice based on your specific filing situation.
There are other credits available at the state and local levels, with eligibility and amounts varying. You can find a compiled list of state offers regarding EV incentives.
Used EV purchases may be eligible for state or other local incentives, but the federal EV tax credit does not apply to used EVs.
If you lease a new EV, you cannot directly receive the federal tax credit. However, the savings from the credit may be passed on to the lessee through a lower monthly payment.
The eligibility rule of 200,000 vehicles sold applies to all qualifying vehicles sold by a manufacturer, not on a model-by-model basis.
Maximize Your Savings: Qualifying for the $7,500 Federal Tax Credit
Are you considering purchasing an electric vehicle (EV) and wondering if you can take advantage of the $7,500 federal tax credit? In this article, we’ll explore the requirements to qualify for this credit and provide you with valuable insights to help you make an informed decision. Let’s dive in!
Understanding the Eligibility Criteria
To be eligible for the $7,500 federal tax credit, there are a few essential criteria you must meet. Let’s break them down:
Choose the Right Manufacturer: Firstly, ensure that the EV you intend to purchase is manufactured by a company that builds their vehicles on U.S. soil. This criterion supports local production and boosts the American economy.
Avoid High-Claim Manufacturers: Additionally, you need to buy an EV from a manufacturer that hasn’t surpassed 200,000 claims for this tax credit. This requirement ensures that the credit is available to a wider range of buyers and promotes fair competition among manufacturers.
Value Limit for Different Vehicle Types: The value of the EV you’re buying should be under $55,000 if it’s a car or $80,000 for trucks and SUVs. This criterion ensures that the credit primarily benefits those who purchase more affordable electric vehicles.
Income Threshold: Your annual income should be below $300,000 for a family or $150,000 per individual. Meeting this requirement ensures that the tax credit is accessible to individuals and families across different income levels.
By fulfilling these criteria, you can become eligible to claim the $7,500 federal tax credit, allowing you to maximize your savings when purchasing an EV.
Exploring Additional EV Credits
While the new federal tax credit for used EVs is not as generous as the previous $7,500 credit, there are still benefits worth considering. Let’s take a closer look:
Cost Savings: Opting for a used EV can result in significant cost savings compared to buying a new vehicle. Depreciation plays a vital role here, as used EVs are generally priced much lower than their newer counterparts. This affordability makes them an attractive option if you want to save money while still enjoying the benefits of eco-friendly driving.
Accessibility: The credit for used EVs is more accessible for cheaper models. This accessibility opens up opportunities for a broader range of buyers who may be looking for budget-friendly options.
Age and Price Criteria: To qualify for the credit, the used EV must be at least two model years old or older at the time of sale and priced under $25,000. These criteria ensure that the credit incentivizes the purchase of affordable, pre-owned electric vehicles.
Make an Informed Choice
In conclusion, it’s evident that there are numerous options available to meet your electric vehicle needs. The market offers a wide variety of excellent EV models that provide great value for your money.
If affordability and maximizing your savings are top priorities, we highly recommend considering the Chevrolet BOLT EUV. This EV not only comes at an affordable price but also offers competitive features that enhance your driving experience. Moreover, by choosing the Chevrolet BOLT EUV, you can take full advantage of the $7,500 tax credit available to eligible buyers.
Make an environmentally conscious decision and enjoy the benefits of owning an electric vehicle while making the most of the federal tax credit. It’s time to hit the road and embrace a greener future with the perfect EV for you!
Disclaimer: The information provided in this article is for general informational purposes only. Please consult a qualified tax professional or financial advisor to understand the specific eligibility requirements and tax implications of the federal tax credit based on your individual circumstances.