To determine if your electric vehicle (EV) purchase qualifies for both federal and state tax credits, follow these steps:
Federal Tax Credits
- Eligibility Criteria:
- New Vehicles: The EV must be a qualified plug-in electric or fuel cell electric vehicle. It must be purchased after December 31, 2022, to qualify for the current rules. The maximum credit is $7,500, but it depends on the vehicle’s battery capacity and sourcing requirements.
- Used Vehicles: For used EVs, the vehicle must have a sale price of $25,000 or less, a model year at least two years earlier than the calendar year of purchase, and not have been previously transferred to a qualified buyer since August 16, 2022. The maximum credit is $4,000.
- Vehicle Classification: Ensure the vehicle meets the new classification rules for SUVs if it was purchased on or after January 1, 2023.
- Battery and Sourcing Requirements:
- Vehicles must comply with critical mineral and battery component sourcing rules. These requirements can affect eligibility for the full credit.
- Check Eligibility: Visit the IRS website or fueleconomy.gov for a list of eligible vehicles.
State Tax Credits
- Research State Incentives:
- Each state has its own set of incentives. Some states offer rebates, credits, or exemptions from certain fees. Check with your state’s department of motor vehicles or energy department for available incentives.
- Eligibility Requirements:
- Requirements vary by state, but often include factors like vehicle type, purchase date, and residency.
- Application Process:
- Procedures for claiming state credits can differ significantly. Be sure to follow the specific application guidelines provided by your state.
Combined Credits
- Federal Credit Application: Claim the federal credit when filing your income tax return using Form 8936 for new vehicles or Form 8938 for used vehicles.
- State Credit Application: Follow your state’s specific application process for any state credits.
By understanding and meeting both federal and state requirements, you can maximize your tax benefits for purchasing an electric vehicle.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-i-know-if-my-ev-purchase-qualifies-for-both-federal-and-state-tax-credits/
