The modified adjusted gross income (MAGI) determines eligibility for the federal electric vehicle (EV) tax credit using specific income thresholds based on filing status. Here’s how it works:
MAGI Calculation and Income Limits
MAGI is calculated by taking your adjusted gross income (AGI) from Line 11 of IRS Form 1040 and adding back certain deductions like student loan interest or exclusions such as foreign-earned income. For the EV credit, eligibility is based on the lesser of your MAGI for either:
- The year you purchase the vehicle, or
- The previous tax year.
Income Thresholds for New EVs
Maximum MAGI limits for new EVs are:
| Filing Status | MAGI Limit |
|---|---|
| Married filing jointly | $300,000 |
| Head of household | $225,000 |
| All others (single, etc.) | $150,000 |
Income Thresholds for Used EVs
For used EVs (priced under $25,000), the MAGI limits are lower:
- $150,000 for joint filers
- $112,500 for heads of household
- $75,000 for others.
Key Considerations
- Transferability: If you transfer the credit to a dealer at purchase but later exceed MAGI limits, you may need to repay the credit.
- Documentation: The IRS verifies MAGI using tax returns, and exceeding limits disqualifies you even if the dealer initially approves the credit.
- Stable Limits: Income thresholds remain unchanged for 2024 purchases, using either 2023 or 2024 MAGI.
Failure to meet these MAGI requirements invalidates eligibility for the tax credit.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-magi-affect-eligibility-for-the-ev-tax-credit/
