Shopping for a new electric vehicle can be an outstandingly exciting time because you get a chance to step into the future. As electric cars become more common, there is a vast selection of models to consider. Determining the features you want, your ideal range, and anything else can be an essential aspect of the shopping experience. One important aspect to consider is the available federal EV tax credit. What electric cars should you consider if you’d like to take advantage of this benefit?
What electric cars are eligible?
To take advantage of the federal EV tax credit, you must first shop for one of the eligible models. They must be electric vehicles or plug-in hybrid models (PHEV), and the model year does not matter. Additionally, the eligibility for this tax credit also comes down to the battery capacity, so some models may not be eligible for the full tax credit.
If you’d like to take advantage of the total tax credit, $7,500, consider electric vehicles such as:
- Audi e-tron
- Audi e-tron Sportback
- BMW i4
- Hyundai Ioniq 5
- Lucid Air
- Mini Cooper SE Hardtop
- Nissan LEAF
- Porsche Taycan
- Volkswagen ID.4
These full-electric models all benefit from the full credit. Still, many plug-in hybrid models (PHEV) also benefit from the federal EV tax credit. When looking at this list, you may be surprised that models from the GM family of brands and Tesla are unavailable. That is because those two brands sold more than 200,000 models, which in turn makes those brands ineligible for the federal EV tax credit.
Are there models available for a lower amount of tax credits?
Yes! A massive selection of different models available, mostly PHEV models, are eligible for some federal tax credits. Many of these models allow you to get tax credits from as low as $1,875 to $6,843. That is still quite a bit of extra money to help lower the cost of purchasing one of these models. The EPA has a complete list of models for you to look at and see what amount of credit you could receive.
What exactly is this tax credit, and how do I claim it?
The big question surrounding the tax credit is, what exactly is this federal EV tax credit? The easiest way to explain this credit is an amount you can claim on your taxes that will lower your tax liability. This means that if you can claim the total amount of $7,500, you can reduce the amount of money you owe on your taxes.
To claim this credit, you will need to fill out a specific IRS form, and if it all works out, you could owe substantially less or no money at all. But, be aware that this tax credit is non-refundable, which means it won’t automatically increase your refund or put your tax liability below $0.
This all may be confusing, and believe me, it is. Talk to a tax professional to better understand this tax credit and how it could affect your financial situation.
Do used EVs or leased models qualify?
Can you get this tax credit if you decide to shop for a used EV? No, the tax credit only applies to a new EV purchase. But, you could benefit from local or state incentives, so check into that option. Furthermore, if you lease a new EV, you can not take advantage of this tax credit. But, you may enjoy some added savings thanks to a lower lease payment.
Take advantage of this tax credit while you can
Because this tax credit only applies to a specific number of models, if you are interested in a new electric car or plug-in hybrid vehicle, start the shopping process now. While the limit is 200,000 models, and there are few automakers close to this threshold, you don’t want to miss out.