Plug-in Electric Drive Vehicle Credit

A government tax benefit meant to promote the acquisition of electric cars (EVs).

This nonrefundable credit can help lower a taxpayer’s responsibility when purchasing a qualifying EV.

Qualifying for the Credit

A car has to satisfy the following requirements to be eligible for the credit:

• The car must have a battery at least 7 kilowatt-hours (kWh) in capacity.
• The car has to be built by a manufacturer satisfying IRS and Department of Energy criteria.
• The credit is just for new cars, not used ones.
• The vehicle has to be mostly intended for usage on public roads.
• Gross Vehicle Weight Rating (GVWR): Under 14,000 pounds.

Amount of Credit

• The highest allowable credit is $7,500, though the precise amount varies depending on the battery size and final assembly site.
• Vehicles not meeting final assembly and major mineral sourcing criteria under the Inflation Reduction Act lose the credit as of 2023.

Applying for the Credit

• Taxpayers file Form 8936 with their federal tax return to claim the credit.
• Being nonrefundable, the credit can lower your tax obligation to zero but will not create a refund.
• If leasing an EV, the credit usually goes to the leasing firm, though some pass it on as an incentive to the lessee.

Phase-Outs and Limitations

• Some high-income taxpayers might not qualify:
  • Single taxpayers: Credit phases out above $150,000 income.
  • Joint filers: Credit phases out above $300,000 income.
• Price restrictions apply:
  • Sedans: Must be under $55,000.
  • SUVs, trucks, and vans: Must be under $80,000.

Knowing the Plug-in Electric Drive Vehicle Credit enables consumers to maximize savings while supporting renewable energy projects.

This entry was posted on Thursday, April 3rd, 2025 at 7:25 pm and is filed under Credits, Deductions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.