Need Help Buying an EV? Here’s How To Navigate the Tax Credits

Rhea-AI Summary

Tax credits for electric vehicles (EVs) are part of the federal Inflation Reduction Act, providing up to $7,500 for new vehicles and up to $4,000 for previously owned. Prospective EV buyers can research options, check eligibility, and save on fuel and operating costs. Duke Energy is working to expand charging infrastructure. New vehicles have a maximum credit amount of $7,500, while pre-owned vehicles have a maximum credit of $4,000. Consumers can claim the tax credit through the end of 2023 by completing IRS Form 8936 with their tax filings.

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• Tax credits make EVs more affordable, potentially bringing the cost closer to that of internal combustion engine-equipped vehicles.
• Consumers can expect up to a $7,500 reduction in their federal tax liability with the purchase of an eligible EV.
• Switching to clean vehicles can result in lower fuel and operating costs.

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• None.

NORTHAMPTON, MA / ACCESSWIRE / June 21, 2023 / Duke Energy

By Vanessa Infanzon illumination Contributor

If you're like me, you've read the headlines about tax credits for an electric vehicle (EV) purchase and wondered if an EV is a fit for your family. Our cars are more than 15 years old, so we know a vehicle purchase is imminent. A tax credit could bring an EV closer to our budget.

The newest tax credits for EVs are part of the federal Inflation Reduction Act. The EV tax credits include up to $7,500 for new vehicles, and up to $4,000 for previously owned.

"These new credits create opportunity for prospective EV buyers, many of whom we anticipate will be first-time EV drivers," said Dylan Lustig, public policy manager at Duke Energy.

Here's what you need to know if you're thinking about buying an EV:

Research your options

• Know what is eligible for tax credits.
• Duke Energy's EV page can help customers decide what car is right for them and how much they'll save with the fuel savings calculator. The company also has programs to help cover the costs of upgrading electric infrastructure for installation of a charger in some jurisdictions.
• "I strongly recommend leaning on a tax professional," Lustig said, "make sure you and your vehicle of choice are eligible to receive them."
• Review these IRS resources: Vehicles that qualify for credits, fact sheets and FAQs.
• Sedans cannot have an MSRP (manufacturer's suggested retail price) greater than $55,000. SUVs, trucks, and vans cannot have an MSRP greater than $80,000. The MSRP is on the vehicle information label attached to the vehicle at the dealer. According to the IRS, the MSRP for the tax credit is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment attached to the vehicle at the time of delivery to the dealer. MSRP does not include destination charges or optional items added by the dealer, taxes and fees.
• Some previously owned vehicles purchased from a qualifying dealer are eligible for credit.

How does this benefit me?

Consumers can expect to see up to a $7,500 reduction in their federal tax liability with the purchase of an eligible vehicle. Switching to clean vehicles can potentially help save in other ways, including through lower fuel and operating costs, said Allan Zhao, an engineer in EPRI's electric transportation program.

• Tax credits make EVs more affordable. This tax credit, he said, could bring the cost closer to the cost of an internal combustion engine-equipped vehicle.
• "We're seeing an uptick in the market of consumer interest in electrical vehicles," said Leilani Gonzalez, policy director at Zero Emission Transportation Association, a nonprofit focusing on advocacy and education around zero emissions. "One (EV) car is really impactful in reducing carbon emissions. EVs don't have any tailpipe emissions."

Charge up on road trips

Some people are concerned with the availability of charging stations during long road trips, known as "range anxiety." Duke Energy is working with its states to ease concerns about finding a charger and has programs to help business owners deploy chargers.

"Just like you rely on gas stations along your route to fill up the tank on your gas-powered vehicle, a network of EV chargers will provide access to chargers for EV drivers," said Logan Kureczka, lead communications manager at Duke Energy. "We are supporting our states' plans to build out EV charging infrastructure to provide drivers with effective, efficient, and convenient charging options that enable long-distance travel - ensuring drivers are comfortable knowing there will be ample chargers along their route."

Make the purchase

New vehicles have a maximum credit amount of $7,500. The tax credit is calculated by whether a vehicle meets two domestic manufacturing criteria: $3,750 for battery component requirements and $3,750 for mineral requirements. In addition to these requirements, there are other eligibility restrictions:

• Qualifying new vehicles final assembly location must be in North America and have a 7-kWh minimum battery capacity and meet vehicle MSRP limits.
• Qualifying consumers for a new EV must meet income limits: single filers: $150,000; joint filers: $300,000; single head of households: $225,000.
• Pre-owned vehicles have a maximum credit of $4,000. The amount depends on the vehicle's specifications. To qualify, a vehicle must be at least two model years old, have a minimum battery capacity of 7 kWh, and be listed for less than $25,000 at a qualified dealer. The battery and mineral requirements do not apply for pre-owned vehicles.
• Qualifying consumers for a pre-owned EV must meet income limits: single filer: $75,000; joint filer: $125,000, single head of household: $112,500.

Get the tax credit

As part of the credit claim process, the dealership will provide both the consumer and IRS information such as VIN and details of the sale.

• Through the end of 2023, consumers complete IRS Form 8936 with their tax filings to claim the tax credit.
• Starting Jan. 1, 2024, consumers will be able to claim the credit amount at the point of sale.

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FAQ

What are the tax credits for electric vehicles?

The tax credits for electric vehicles are part of the federal Inflation Reduction Act, providing up to $7,500 for new vehicles and up to $4,000 for previously owned.

How can I check if I'm eligible for the tax credits?

You can check your eligibility by reviewing the IRS resources, including the vehicles that qualify for credits, fact sheets, and FAQs.

How can tax credits make EVs more affordable?

Tax credits can reduce the cost of an electric vehicle, potentially bringing it closer to the cost of an internal combustion engine-equipped vehicle.

What is the maximum credit amount for new and pre-owned vehicles?

New vehicles have a maximum credit amount of $7,500, while pre-owned vehicles have a maximum credit of $4,000.

How can I claim the tax credit?

Consumers can claim the tax credit through the end of 2023 by completing IRS Form 8936 with their tax filings.