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Electric Vehicle Tax Credit

| February 08, 2023

The recently updated Electric Vehicle Tax Credit has many taxpayers considering the switch from gas to electric. For many, the tax credit can be up to $7,500 for the purchase of an eligible vehicle.

While the IRS lifted the 200,000-vehicle production cap for some manufacturers in 2023, therefore making some more popular manufacturers such as Tesla once again eligible for the credit, new conditions may make it more difficult for taxpayers to receive the tax credit. To start with, income caps were implemented where Single Filers must earn less than $150,000 and MFJ Filers must earn less than $300,000 to qualify for the tax credit. In addition, there are Manufacturer Suggested Retail Price (MSRP) caps of $55,000 for most vehicles and $80,000 for SUVs which further limits the applicability of the credit for some. Vehicles must also be made in North America and not exceed a certain mineral content for their battery composition.

If you earn more than the caps or “build a car” that is over the MSRP limits, you may not be eligible for the credit and therefore may want to reconsider your new EV purchase. Of course, we always encourage making purchases based on your needs and philosophies, but also encourage reviewing all eligibility requirements if the tax incentives are part of the reason for the purchase.