Key Year End Tax Planning Series: Electric Vehicle Tax Credit

Thinking About Buying a New Car? Consider an EV! EVs provide a great year-end tax planning opportunity.

The credit is available for both individuals and their businesses.​

To qualify, you must:​

• You must buy it for your own use, not for resale​
• Use it primarily in the U.S.​

Additionally, your AGI may not exceed:​

• $300K for married filing joint​
• $225K for head of households​
• $150K for all other filers

Qualified Vehicles:

To qualify, a vehicle must:​

• Have a battery capacity of at least 7 kilowatt hours​
• Have a gross vehicle weight rating of less than 14,000 pounds​
• Undergo final assembly in North America​
• Meet critical mineral and battery component requirements​

The sale qualifies only if:

• You buy the vehicle new​
• The seller reports required information to you at the time of sale and to the IRS.

In addition, the vehicle's MSRP can't exceed:

• $80,000 for vans, SUVs and pickup trucks​
• $55,000 for other vehicles

Use this IRS Link to Check if your Vehicle Qualifies!

Credit Amount:

For vehicles placed in service Jan 1 to April 17, 2023:​

• Up to $7,500 total​

For vehicles placed in service April 18, 2023 and after:​

Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:​

• $3,750 if the vehicle meets the critical minerals requirement only​
• $3,750 if it meets the battery components requirement only​
• $7,500 if the vehicle meets both

A vehicle that doesn't meet either requirement, will not be eligible for a credit.

How to Determine Eligibility: “Tax Liability”

How can you tell whether you would benefit from the tax credit?

• You must have a tax liability above $7,500

Note:​

• You are only entitled to the maximum $7,500 tax credit when your tax liability for the year is $7,500 or more.​
• If your tax liability is $3,000 then you are only entitled to a $3,000 credit.​
• NOTE: This is different from your refund

Tip: Find your tax liability from the prior year on line 24 of the Form 1040

If you're a business owner in the New York Metro Area and need help making the best decisions for your business, request a consultation with our experienced accountants today. We look forward to providing you service.