That $7,500 electric vehicle tax credit may soon be harder to get. Here are 2 workarounds
That $7,500 electric vehicle tax credit may soon be harder to get. Here are 2 workarounds

That $7,500 electric vehicle tax credit may soon be harder to get. Here are 2 workarounds

10 April, 2023 11:23 AM

With the U.S. Department of the Treasury's rule going into effect within a week, consumers will soon struggle to get a $7,500 federal tax credit when they buy a new electric car.

But there's good news for buyers: People interested in buying a used electric car or renting a new car may qualify for a separate tax that's usually easier to claim, experts say.

Why new EV credits for will be more difficult to apply

The Low Inflation Act, signed by President Joe Biden in August, imposes several manufacturing requirements for new all-electric and plug-in hybrid vehicles to qualify for the full $7,500 tax credit. credit.

For example, the last meeting of the car should be held on August 17 in North America. Products and essential equipment - will be implemented on April 18 and will be phased out in a few years, according to the bank.

Lawmakers want to encourage manufacturers to use domestic materials to make batteries, rather than relying on countries like China for essential products. However, expect fewer cars to qualify for the $7,500 credit in the short term, at least until companies meet the new battery rules.

The IRS will update the list of eligible electric vehicles on April 17. At that time, vehicles currently eligible for a discount may contain little or no tax. Maybe only temporarily, there is a full tax credit.

$4,000 Credit for Low-Tax Electric Vehicles

Tax Credit also provides a tax credit to consumers who drive electric or petrol vehicles.

Used car tax credit of $4,000 or 30% of sales price, whichever is less, effective through 2023.

"Former Owned Vehicle" has no production rights to new EVs - this is great for consumers who are in the EV market and want to maximize their savings and save more money.

"If you want a new car that isn't eligible for the [$7,500 loan], you can save some money and get a tax credit [by buying an electric car]," said Plug director Ingrid Malmgren. in America.

said he has used car loans for many cars. Consumers can refer to the IRS listing to determine eligible used vehicles.

Some important standards for vehicle manufacture and customer compliance are:

  • Vehicles must be purchased from a licensed dealer.
  • The model year of the vehicle must be at least 2 years old.
  • The selling price must be $25,000 or less.
  • is only open to individuals, not businesses.
  • Recipients are ineligible for a loan if their annual income is: $75,000 for singles, $112,500 for heads of household and $150,000 for mothers. Buyers measure their income for the year they purchased the car or the previous year, whichever is lower. (Income is measured as "Modified Adjusted Gross Income".

However, Katherine Breaks, head of taxation Credit and Energy Advisory Services at KPMG, says these income limits are "lower" than the limits applicable to the $7,500 tax credit for new cars. says it is. Group Income from a new car is double that of driving an electric vehicle.

Return of both new and used equipment, meaning car buyers must pay taxes to get tax credits at all costs.

"What is a tax credit? What should I do if I don't owe $4,000 in taxes?

Not much,” Rais said about used car loans. This can only be claimed when filing an annual tax return.

Buyers can also get up to $7,500 in tax credits when they lease a new electric vehicle.

This means that more cars will be available in the first place - customers who want to rent a car are somewhat at a disadvantage.

"There are a few restrictions," said Malmgren. 

 Automakers with joint leasing or financing arms can buy electric cars for the business and then lease them to customers, Malmgren said, at which point they can roll over their profits.

Malmgren said for $7,500 "Most companies are very clear that they will transfer all the money to the customer."

"But you should get tested. Because not everyone gets over it."