Whether you’ve been looking into getting an electric vehicle or you already have one, you’ve probably heard about the federal incentive. The real question is, how does the federal tax credit for electric cars work for you as an owner? The federal tax credit starts at a minimum of $2,500 and can go up to $7,500, depending on the car’s traction battery capacity and gross vehicle weight rating. When you purchase an eligible EV, you may be able to earn this credit which means more benefits alongside lowering your footprint and making your Canastota drives eco-friendly.
For most Oneida drivers, whenever this electric car tax credit is mentioned, it often sounds like every electric model is applicable but that’s not quite true. You may be able to earn this credit when you buy a qualified new EV after December 31, 2009 and a qualifying EV needs to meet the following criteria:
Use this tool to estimate the credit you’ll receive for the model that you’re considering for your Utica commutes. Something you should keep in mind is that the model you’re interested in has to be built by qualified manufacturers in order to earn the maximum electric car tax credit of $7,500. And they also need to have battery packs that are rated for at least 4 kWh of energy storage and can be recharged from an external source.
You’ll need to see if the credit can be applied to your taxes. First, remember that this tax credit is only available if you buy the vehicle. If you lease an EV instead, the tax credit will go to the lending institution instead as they technically own it.
Once you know you’re set on buying an EV, you’ll need to consider how much you will owe in income tax for that year. This amount is key because it caps how much of the tax credit you can get. For example, if you buy an electric model eligible for the full $7,500 and you owe $3,000 in income tax, then you can only earn $3,000 of the credit. Similarly, say if that model is only eligible for $1,500, then you will earn only $1,500 instead. In other words, you can only earn the full amount if you owe at least $7,500 in income tax the year you bought your EV and the model has an eligible electric car tax credit for $7,500.
You should also be aware that you cannot pass the tax credit on to someone else even if you decide to sell your EV. Only the registered owner of an eligible model can claim this credit, so if you want to buy a used model instead, you won’t be able to access it. If you have any additional questions, you can always contact our finance center team.
Once a manufacturer has sold 200,000 eligible plug-in electric models or EVs, the credit will phase out after the second quarter. Because of this limit, you won’t be able to claim this credit on some models from manufacturers that have already reached this limit. For example, any Tesla and General Motors (GM) EVs won’t be qualified for the credit. View the list of qualifying manufacturers from the IRS.
If you’re not quite sure if an EV is the right choice for you, take a look at our new vehicle specials for more information and to explore savings on our impressive models. Or if you want to learn more about how the federal tax credit for electric cars works, you can always contact us for more information. We can’t wait to get you behind the wheel of a new EV from Sun Chevrolet!
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