Broker Check

Electric Vehicle Tax Credits

| January 17, 2024

Recent tax law changes have expanded the eligibility for Electrical Vehicle tax credits of up to $7,500 per eligible vehicle.  Eligible vehicles must meet several strict production requirements including where vehicle components are made, where final assembly occurred, where key battery materials are sourced, and if a Plug-In Hybrid Electric Vehicle (PHEV), the capacity of the battery for the electric component of the vehicle. In addition, taxpayers must meet Adjusted Gross Income (AGI) requirements using their current or prior year AGI.

The tax credit can be applied for on your tax return the year the vehicle was purchased.  For some, especially those who purchase early in the year, that would mean waiting nearly a year for the tax benefit to be realized.  Depending on the vehicle and dealership, the credit may be transferred to the dealer (instead of claimed on your tax return) for a price reduction so that the taxpayer does not have to wait until tax time for the tax benefit.  Instead, the dealership can be reimbursed by the IRS so that the taxpayer can benefit from an immediate savings.

Of course, we always recommend doing a thorough analysis of eligibility before making such a big purchase since the credit will still need to be reconciled on your tax return and may be clawed back if you do not qualify.