To apply for both federal and state electric vehicle (EV) tax credits, follow these steps:
Applying for the Federal EV Tax Credit
- Check Eligibility
Confirm that your new EV qualifies for the federal tax credit. The federal credit can be up to $7,500 for new qualified plug-in electric vehicles purchased in 2023 or later. Eligibility depends on factors such as the vehicle’s battery sourcing, final assembly location, MSRP limit, and your modified adjusted gross income (AGI) limits (e.g., $300,000 for married filing jointly). The vehicle must be for your own use and mainly driven in the U.S. - Obtain Vehicle Information from the Dealer
At the time of sale, the dealer must provide you with information about the vehicle’s eligibility for the credit, including the Vehicle Identification Number (VIN). The dealer is also required to report this information to the IRS for your vehicle to qualify. - File IRS Form 8936 with Your Federal Tax Return
To claim the federal EV tax credit, you need to file IRS Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit,” with your federal income tax return. On this form, you include details like the vehicle’s VIN. The form calculates your allowable credit amount based on your vehicle and income. - Understand the Credit Limitations
The federal credit is non-refundable, meaning it can reduce your tax liability to zero but you will not receive a refund for any amount exceeding your tax owed. You cannot carry the credit forward to future tax years.
Applying for State EV Tax Credits
- Identify Your State’s EV Tax Incentives
States often offer their own tax credits, rebates, or incentives for electric vehicle purchases, which vary widely. These incentives might be direct tax credits, rebates, reduced registration fees, or other benefits. - Follow State Tax Department Guidelines
Each state’s tax authority or energy department website provides instructions on how to apply for state EV tax credits or incentives. Usually, you will need to submit proof of purchase, vehicle VIN, and possibly your federal tax forms. - Claim State Credits on Your State Tax Return
Typically, state EV tax credits are claimed when you file your state income tax return. Some states require a separate application or documentation before credit issuance. - Combine Incentives Where Possible
Federal and state EV tax credits usually can be combined to reduce your total cost, but you must apply separately through federal and respective state channels.
Additional Tips
- Review official IRS resources such as Publication 5866 and Publication 5905 for detailed federal credit qualifications and consumer information.
- Check the U.S. Department of Energy and your state’s energy or transportation department websites for up-to-date vehicle eligibility lists and state-specific credit details.
- Consider incentives for home EV charger installation, which may also provide tax credits or rebates.
By carefully verifying vehicle eligibility, income thresholds, and filing IRS Form 8936 with your federal tax return, plus applying through your state’s tax agency for state credits, you can maximize your tax benefits when purchasing an EV.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-i-apply-for-both-federal-and-state-ev-tax-credits/
