To claim electric vehicle tax credits, the process and qualifications are as follows:
Key Qualifications
- Income limits: Modified adjusted gross income (AGI) must not exceed $300,000 (married filing jointly), $225,000 (head of household), or $150,000 (others). Your AGI from the year of purchase or the prior year qualifies if either falls below the threshold.
- Usage requirements:
- Vehicle must be purchased for personal use (not resale).
- Primarily driven in the U.S..
- Vehicle eligibility:
- New vehicles must be plug-in electric or fuel-cell and meet battery and critical mineral sourcing rules (see below).
- Seller requirements: Dealers must provide eligibility info and report sales to the IRS.
Credit Amounts
- New EVs: Up to $7,500, split into two $3,750 portions:
- Battery component: At least 50–90% (by year) of components must be manufactured/assembled in North America.
- Critical minerals: 40–80% (by year) of minerals must be extracted/processed in the U.S. or a free-trade partner.
- Used EVs: Up to $4,000 (30% of sale price, capped at $4k) for vehicles under $25,000.
How to Claim
- Confirm eligibility: Check the IRS’s approved vehicle list and ensure your income qualifies.
- Submit IRS Form 8936: Attach this to your federal tax return.
- Non-refundable credit: Reduces owed taxes but won’t generate a refund if credit exceeds liability.
For state-specific benefits (e.g., Colorado), additional credits may apply. Home charger installations may qualify for a separate $1,000 tax credit.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-tax-credits-for-electric-vehicles-work-and-what-qualifications-are-needed/
