The American government offers tax credits to those who purchase electric cars as a kind of encouragement. This credit is intended to encourage more individuals to purchase fully electric vehicles (EV), which will eventually lower their price, potentially encouraging more people to buy. Ultimately, the goal is to benefit the environment. Since electric vehicles produce no emissions, they also produce no greenhouse gasses or other forms of pollution.
If you’re interested in switching to driving an EV and wondering how you can get a tax credit for it, read on!
What is the Electric Vehicle Tax Credit?
Electric car makers can get a limited number of tax credits to help them sell their cars. The idea is that as more electric cars are sold and the technology gets cheaper to make, prices will go down and buyers won’t need as much of a reason to buy one. But these tax credits haven’t run out yet, and they are still a big help to people who own electric cars.
It’s important to know how EV tax credits work before you buy one. Remember that you can’t get this credit if you lease an electric car. You have to buy it. When you lease an EV, the leasing company still technically owns it, so they will be eligible for the tax credit, not you. You can still benefit from the tax incentive if the leasing company reduces the monthly lease payments.
Furthermore, the EV tax credit is only available to people who buy new cars, not used ones. But since used electric cars are much cheaper than new ones, the incentive is no longer necessary. You can check out Energy.gov for more information on the exact credits and incentives available in every state, but you can check out this link to know what’s available for Illinois residents.
How Much is the EV Tax Credit?
The federal government offers a tax credit of $2500 to $7500 to anyone who purchase new electric vehicles. The size and power of the battery will impact how much of a rebate you can expect to receive. Tax credits for various makes and models can be researched in online sources like FuelEconomy.gov. After more than 200,000 electric vehicles from each manufacturer have been sold and utilized to claim the federal tax credit, the program will be phased out.
Learn more about the EV tax credit and if you can qualify for it.
Did you recently buy an electric vehicle and wondering how you can get a tax credit for it? Or maybe, you’re planning to purchase one soon? Let’s talk! Let us walk you through the process while also identifying other ways you can reduce your taxes. Schedule a consultation with our CPA now!
