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9 minutes read. Published January 23, 2023

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of borrowing money to purchase an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to take control of their finances through providing concise, well-researched and well-documented facts that break down complex topics into manageable bites. The Bankrate promises

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You have money questions. Bankrate has answers. Our experts have been helping you master your finances for more than four years. We are constantly striving to give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is honest and accurate. Our award-winning editors and journalists create honest and accurate content to help you make the best financial decisions. Our content produced by our editorial team is factual, objective and is not influenced from our advertising. We’re open regarding how we’re capable of bringing high-quality content, competitive rates, and useful tools to you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products andservices or by you clicking on specific links on our site. This compensation could affect the way, location and when products appear in listing categories in the event that they are not permitted by law. This is the case for our mortgage home equity, mortgage and other home lending products. Other elements, such as our own rules for our website and whether a product is available in your region or within your personal credit score can also impact the manner in which products are featured on this website. While we strive to provide the most diverse selection of products, Bankrate does not include the details of every financial or credit item or product. Electric vehicles are no longer exclusive to car owners. In fact, the EV market has experienced a massive expansion over the last couple of years, with registrations increasing to 60 percent by 2022, according to . In the meantime electric vehicle options are expanding and currently include a wide selection of designs and prices. also comes with many money-saving perks. Apart from the obvious savings on gasoline, there are electric car tax credits available to those who purchase an electric vehicle. Based on the state you reside in the electric car you own can help you save thousands. What exactly is an EV tax credits? It is the EV tax credit is a financial incentive created by the government to allow you to earn money from the back of credits, up to $7,500, when you purchase an eligible electric vehicle. Statistics on electric cars The simplest method to determine how the market is growing is to take a look at the most the most recent . About 7 percent of the total light-duty vehicle sales as of the 3rd quarter in 2022 were electric vehicles. ( ) California has the largest percentage of new EV registrations on Dec. 31, 2021, with approximately 39 percent. ( ) In the year of 2021 there were about 16.5 million electric vehicles driving around. ( ) Around half of Americans are considering buying or leasing an electric vehicle which is up by 10 percent over the previous year. ( ) California has the most charging stations at 14,463, followed by New York, Florida and Texas. ( ) Tesla is the most loved electric vehicle by American customers. ( ) Fifty-three percent of those who aren’t interested in EVs worry of the inconvenience that comes with vehicle charging. ( ) Gen Z are the first users of electric vehicles, with 32 percent noting their desire to buy one in the next three years. ( ) Tesla made up 68 percent of all EV registrations during the first second quarter of 2022. ( ) fifty-nine percent of consumers are somewhat or extremely likely to buy an EV ( ).

EV tax credit requirements The EV tax credit was a Federal incentive created to motivate drivers to buy an electric vehicle. The incentive isn’t a check you receive after a vehicle purchase, but rather a tax credit worth up to $7500 that you will be eligible to receive. The credit is available to all plug-in and electric vehicles, but specific credit amounts can be found through the U.S. Department of Energy’s website . What is the criteria for qualifying? Depending on the age of your vehicle in order to be eligible for the incentives, your vehicle must meet certain specifications. If you purchased your car in 2022 or prior to: Have been purchased on or after December 31, 2009. The vehicle must be brand new and not previously used. It must be a new vehicle that is not leasing. It must weigh between 14,000 and 14000 pounds. Have a battery capacity of at least four kilowatt hour (kWh). It is intended for use exclusively within the United States. Only for personal useonly, not for resale. Make use of an external recharge source. If the vehicle you purchased was purchased in 2023 of after: Purchase it for your own use, not for resale. It is used primarily in the U.S. Have a battery capacity of at least 7 kWh. A vehicle’s gross weight rating of no more than 14000lbs. It must be made by a . Final assembly will be completed in North America. MSRPs below $80,000 for vans as well as sport utility vehicles and pickup trucks. $55,000 is the limit for other vehicles. If your used vehicle was bought in 2023 or after You must be an individual who purchased the vehicle solely for use and not for resales. Be the owner of the vehicle at first. Not be claimed as dependent on another’s tax return. Have not claimed a used credit for a clean vehicle in the three years prior to the purchase date. Have a sale price of $25,000 or less. You must have a model year that is at least two years earlier that the year when you purchase it. For instance, a car bought in 2023 will require a model that was 2021 or more. Have not been transferred prior to August 16, 2022 to a qualified buyer. Be a vehicle with a gross weight of not more than 14,000lbs. Be an eligible FCV or plug-in electric vehicle with the capacity of a battery of at least seven kWh. It is intended for use exclusively inside the United States. Purchased by an authorized dealer. Tip for Bankrate

To determine where your car was built, type in your VIN (vehicle identification number) on the website. It is important to remember that purchasing the car on its own does not ensure that you get your tax credits. It is necessary to file a tax return an application with IRS.

The tax credit for income and the EV credit Anyone who provides the required information for a qualifying vehicle using Form 8936 may be eligible to receive the EV tax credits. But amount of income you make can affect what tax credits you are eligible for. If you earn a certain amount of money that is greater than $300,000 for married couples filing jointly, 225,000 for head of household and $150,000 for all other filers, you will not be eligible to receive tax credit. Local and state EV incentives and tax credits Unfortunately, not every state offers EV tax credits and incentives. In fact, more than half of states in the country don’t offer any EV tax credits program. Therefore, prior to setting out to purchase an electric charging station in your garage, think about the amount you could save in your state. EV tax credits based on vehicle manufacturer Here are some of the particular EV tax credits that are offered by vehicle brands. Like every state has its own unique tax system, consider the benefits from one vehicle brand compared to other. Vehicle brand

Credit is available

Information obtained from

Audi

From $4,502 to $7,500

BMW

From $3,793 to $7500

Chevrolet

No longer eligible

Fiat/Chrysler

$7,500

Ford

From $4,007 to $7500

Honda

$3,626 to $7,500

Hyundai

From $4,543 to $7,500

Jaguar/Land Rover

From $6,295 to $7,500

Kia

From $4,543 to $7,500

Mercedes

Between $3,501 and $7,500

Mitsubishi

$5,836 to $7,500

Nissan

$7,500

Porsche

From $3,667 to $7500

Subaru

From $4,502 to $7,500

Tesla

No longer eligible

Toyota

$2,500 to $7,500

Volkswagen

$7,500

Volvo

Between $4,585 and $7,500

Making the choice to purchase an EV Just as with buying a traditional gas vehicle, deciding to dive into the world of buying an electric car requires questioning several factors, including the cost, size and utility. But buying an EV requires extra thought. Here are some questions you should consider before you decide to purchase you should buy an electric vehicle is the right choice for you. Is there charging available in my region? Before you purchase an EV it is crucial to verify that there are available charging stations in your region. Use resources like those offered through to explore options before purchasing. What’s the car’s range? You’ll need to verify that your new vehicle’s range corresponds to your usual driving routine — and any trips you may be contemplating. What’s the anticipated vehicle maintenance? While you’ll have to save some money to pay for checks on service but you don’t need to worry about expenses from oil replacement or other equipment for emissions. What’s the price of EV insurance? The cost of EV insurance is variable, so you need to research and determine which lender is the best fit for your needs. Find Bankrate’s advice on . Do I need to lease an electric vehicle? You might be able to find beneficial manufacturer incentives or if you would rather change your vehicle every couple of years. Should I buy new or used? Weigh available incentives and your budget. The future of EV credit tax incentives Electric cars are still one of the most expensive cars currently available. And until more are produced in the near future, they’ll remain at a higher cost. But because manufacturers are making green cars a priority as well as the federal government looking to reward that with tax credits, it is likely that the tax credit won’t be disappearing any time soon. And if you have been interested in going green for a while and are considering it now, it’s a good time to act. This is particularly true in light of President Biden’s August 2021 executive order stating that half of all new cars sold within the U.S. should be electric by 2030. Although that’s an increase of a significant percentage from today, you may benefit of the current influx of electric cars and also save some money by taking advantage of an tax credit that is available. 2022 Inflation Reduction Act Following months of debate the 755-page Inflation Reduction Act passed and was adopted by President Biden on Aug. 16. It is designed to “fight inflation and invest in domestic manufacturing and energy production, and reduce carbon emissions by roughly 40 percent by 2030,” according to a . The new law will be affecting tens of millions of Americans and encourage more drivers to go electric, and help reduce carbon emissions. The part of the legislation concerning clean vehicles states that the same $7,500 tax credit will be offered to those who purchase an EV however more strict requirements on the car’s components could make finding a qualifying EV challenging. The incentive is divided in two parts. In order for a car to be eligible for the first $3,750, a certain percentage of critical minerals utilized in its battery have to be extracted from the U.S. or a country with which there is a U.S. shares a free trade agreement. The second half of the $7,500 involves the country where the components of the battery come from. Most battery components must be made within the U.S., Canada or Mexico. The required percentages of critical minerals will increase each year from 2024 to 2026, and will continue until 2028 for all components. Additionally, the vehicles must be assembled within North America. While this creates a challenge however, some manufacturers who no longer offer incentives, like Tesla and GM are expected to restart. The legislation removes the limit on the number of EVs sold. In the past, companies that sold 200 vehicles could no longer be able to offer credit. Used EV tax credits Another significant change that has occurred since the legislation was passed pertains to the use of EV tax credits. Drivers who might not be financially able to purchase a new EV may still be eligible for the tax credit. For purchases between $25,000 and $25,000, motorists are eligible for a tax credit of up to 30 % of the cost of purchase, with a maximum of $4,000. Liz Najman, leader of policy research at , explained the way the new legislation will impact car buyers. “Many people who buy cars within the U.S. can now receive up to $4,000 in rebates on a used EV that has a price less than $25,000.” explains Najman. Additionally, a an analysis by the agency’s report revealed that “almost 20 percent of used EVs are priced at a level which is eligible and that portion that is eligible for tax credits only expected to grow this calendar year” Najman says. Najman. “An optimistic early indicator,” says Najman, is that “already in January, approximately 50% of used cars checked with our would receive the money back.” This means that while it may seem that tax credits have limited access due to recent legislation, says Najman, “in reality, the inclusion of used car tax credits is already expanding their scope and the number of people who can to own and operate an electric vehicle.” When does the new legislation go into force?

New used vehicle incentive rules will apply to cars purchased after Dec. 31, 2022. They will end the year following on Dec. 31 2023.

The final word If the time to buy new wheels is now upon you think about buying an electric vehicle in order to tackle climate change and benefit from EV tax credits and incentives. Before deciding on a particular EV be sure to do your homework and determine if there are tax credits that are still available. Also, investigate the availability of charging stations in your area and based on the way you plan to use the vehicle, check the battery range of the vehicle you’re considering. It’s time to compare rates and differing costs of buying an EV over conventional. Information on EV tax credits Do leased vehicles qualify for tax credits for electric vehicles? The federal tax credit does not apply to these . Instead, the money is paid to the leaser. However, this can still lower a monthly payment — if the lessor chooses to factor that incentive into your lease contract. You can mention this in order to try and save money.Certain states offer incentives that are available regardless of whether you are leasing or buying. What happens to the federal EV tax credit be available? It is likely that the credit will be around indefinitely, especially when there is a push to make climate-conscious vehicles. But the available vehicles are continuously changing because of the phase-out system of tax credits.When a particular manufacturer reaches the 200,000 electric vehicles that are sold to be used within the United States, those vehicles cannot be eligible for credits. This is why it is important to determine whether the car you want to buy is still eligible for credit. Does a family get multiple EV tax credit? If two members of the same household buy electric vehicles for their own, they can separately apply for the tax credit on the cars they own. If two people purchase an EV together it can only be claimed once.

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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances through providing precise, well-studied details that cut complicated subjects into bite-sized pieces.

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