Unlocking EV Tax Benefits: Your Ultimate Guide to Credits and Rebates

There are no indications of a slowdown in the industry’s expansion of electric vehicles. Automakers are energizing significant portions of their fleets, and the Detroit-based General Motors has pledged to an all-electric fleet by 2040.

The Inflation Reduction Act, which was enacted in 2022 and provides financial incentives for buying of an electric vehicle, contributes to the increase in EV sales. 

Some states, and in some instances, utility companies, have followed suit by providing incentives for those willing to convert to an electric vehicle or plug-in hybrid.

Who Qualifies for a Tax Credit for EVS?

The eligibility requirements are based on income and intended vehicle use. To qualify for a credit, a single taxpayer’s modified adjusted gross income cannot exceed $150,000. The limit for joint filers is $300,000, and single filers need to have an AGI of $225,000 or less to be eligible.

Only purchases for private use, not resale, are eligible for tax credits, and the vehicle should be used predominantly in the United States.

Currently, the incentive for purchasing an EV is only available as a tax credit, so a taxpayer would only be eligible for the complete $7,500 credit once they paid at least $7,500 in federal taxes.

If an individual paid only $4,000 in taxes but qualified for the full $7,500 credit, they would only receive $4,000.

At the point of sale, EV purchasers will be allowed to transfer the EV credit to the merchant beginning in 2024. 

Currently, tax credits can be claimed using Form 8936 when filing federal income taxes.

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State Offer Rebates on EV Purchases

Check out which rebates are available in your state when you buy an electric vehicle, plug-in hybrid, or electric motorcycle by searching the list below.

• California
• Colorado
• Delaware
• Florida
• Illinois
• Main
• Maryland
• Massachusetts
• Minnesota
• Mississippi
• New Hampshire
• New Jersey
• New York
• Oklahoma
• Oregon
• Pennsylvania
• Texas
• Vermont
• Virginia
• Washington

Source: USATODAY

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