Are you considering buying a new hybrid or electric car in 2023 or later? If so, consider a clean vehicle that runs on electricity or hydrogen.
Because you could save up to $7,500 and $150,000 on your new hybrid electric car.
You can also claim a clean vehicle tax rebate of $4000 for your old electric car.
In 2022 the inflation reduction act 2022 introduced this clean vehicle tax rebate for all those who buy or lease a new E.V. or FCV from 2023 to 2032.
However, it depends on the type and features of your clean car. But it can be worth up to $75000.
But you should know some facts before buying a clean vehicle. You will have them below. So keep reading.
What is a clean vehicle?
First thigh you should know what a clean vehicle is, as all vehicles are not clean. A car must have the following:
- At least have a battery capacity of at least 7-kilowatt hours.
- A gross car weight rating of fewer than 14,000 pounds
- A qualified manufacturer (FCVs do not need this).
- In addition, it should also contain the following battery components according to the new requirements. These requirements are started on April 18, 2023. They are:
- The vehicle must use at least 50% of critical minerals that are sourced from the U.S. or its allies.
- The car must use at least 50% of battery components manufactured in the U.S.
If the vehicle does not meet these requirements, the tax credit will reduce to $3,750. It is only eligible if it meets all of the above.
So make sure to check all these requirements before buying any electric car.
How to Qualify for Clean Vehicle Tax Rebate?
This tax rebate is available for all-electric car buyers and users within the U.S. But you must buy or take on lease these cars for your personal use, not resale.
But an income limit exists to qualify for the ev car tax rebate in 2023.
However, The modified adjusted gross income (AGI) of the taxpayer may not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers.
But you can use your modified AGI to claim the tax rebate on whether you claim it on the year of taking delivery of your vehicle or the year before that.
Which vehicles are Eligible?
The following vehicles are eligible for the hybrid car tax rebate:
- Electric Vehicles (E.V.s):
- Hybrid Electric Vehicles (HEVs)
- Plug-in Hybrid Electric Vehicles (PHEVs)
- Fuel Cell Vehicles (FCVs)
- Compressed Natural Gas (CNG) Vehicles
- Propane Vehicles
- Zero-Emission Trucks and Buses
- Advanced Technology Vehicles
How much is the car credit?
The amount of the credit depends on when the vehicle is placed in service (taken delivery), regardless of its purchase date.
However, for the vehicles placed in service from January 1 to April 17, 2023, the credit is calculated as follows:
- $2,500 base amount
- Plus, $417 for a vehicle with at least 7-kilowatt hours of battery capacity
- Plus, $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
- Up to $7,500 total
Generally, the minimum credit will be $3,751 ($2,500 + 3 times $417) for a vehicle with a minimum of 7 kilowatt hours of battery capacity.
For vehicles placed in service from April 18, 2023, and after, the credit will be either $3,750 or $7,500, depending on whether the car meets or only one of the critical mineral and battery component requirements.
How to claim the credit?
You can claim a tax rebate on your new car by filing taxes for the year the vehicle is in service.
You must complete Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, and attach it to your return.
But make sure to be cautious as it is a nonrefundable credit.
In 2024, eligible consumers will have another option to claim the credit.
You will be able to transfer the value of the credit to the dealers to reduce the vehicle’s purchase price. But they must meet specific requirements.
Conclusion
The new clean vehicle tax rebate is a great incentive for consumers who want to save money and help the environment by buying a new E.V. or FCV. However, not all vehicles qualify for this credit, and some income and usage restrictions apply.
Therefore, before making a purchase decision, research and compare different models and features. Also, tracking when the vehicle is placed in service and how much credit is available is essential.
Considering all the above, you can quickly get your E.V. tax rebate.
