Have you recently purchased an electric vehicle (EV)? The IRS recently issued new guidance on electric vehicles and how you might be able to save on taxes. There are four ways you can potentially benefit from a federal tax credit for an EV you place in service in 2023 or later:
1. Purchase an EV, and claim the clean vehicle credit.
2. Lease an EV, and benefit from the lessor’s EV discount.
3. Purchase a used EV that qualifies for the used EV tax credit.
4. Purchase an EV for business use, and claim the new commercial clean vehicle tax credit.
The new clean vehicle credit is available through 2032, with a maximum credit of $7,500.
To get the clean vehicle credit, you have to meet certain requirements, such as income limits, vehicle price caps, and requirements that the vehicle was made in the United States.
For vehicles delivered on or after April 18, 2023, the amount of the credit depends on whether or not the vehicle meets the requirements for sourcing critical minerals and/or battery components.
If you can’t find an EV that qualifies for the credit or your income is too high, you can lease an EV from a company that can claim up to a $7,500 commercial clean vehicle tax credit.
The leasing company may then give you some or all of the credit back in the form of lower leasing costs.
You can get a credit of up to $4,000 if you buy a used electric vehicle from a dealer and meet the law’s income limits and other rules.
Lastly, if you buy an EV for your business, you may be eligible for the commercial clean vehicle tax credit. This credit is easier to get after April 18, 2023, because it does not have rules about critical minerals or battery components.
In order to get an EV credit, the seller must fill out a seller’s report and give you and the IRS a copy.
File IRS Form 8936 for the clean vehicle credit and IRS Form 8936-A for the commercial clean vehicle credit.
We understand that taxes can be hard. Schedule your free tax consultation and find out more about how the ideas in the article might apply to your specific tax situation.