Many people have heard about the electric vehicle tax credit and want to know if it makes buying electric vehicles worth the investment. Whether it is worth it in your case depends on the circumstances of your return.
There are a number of factors that impact the credit you can get for a vehicle. The battery size of the vehicle, your income tax liability and the method by which you obtain the vehicle are three of these.
The maximum tax credit for any vehicle is $7,500. The credit that you can get for an electric vehicle is $2,500 at a minimum. If a vehicle gets at least 5 kilowatt hours of capacity, there is another $417 credit. Batteries that have a higher capacity than 5 kilowatt hours earn an additional $417 per kilowatt hour.
Some vehicles, such as the Chevrolet Bolt, qualify for the full $7,500 credit. Others, such as the Ford Fusion Energi, qualify for less. The Ford Fusion Energi can net you a $4,007 tax credit. The U.S. Department of Energy maintains a complete list of models that qualify for the credit and the amount of credit you can receive.
The tax liability on your return can impact the credit you can claim. The credit can’t be equal to more than your tax liability, so you won’t get money back from an electric car purchase. This means that if your tax liability is $2,500 and your credit for the electric car is $7,500, you would only be able to claim $2,500 of the credit on your tax return since you can’t get a check for the remainder of the credit.
You can only get the tax credit for an electric vehicle if you purchase the vehicle. Even if you have a car loan, you will still be able to get the credit. If you are leasing the vehicle, however, the leaseholder gets the credit. It might be possible for you to work out a deal that factors the amount of the credit into your payments, but this isn’t required.
Ultimately, you have to look at your own tax situation to determine if the tax credit makes investing in electric vehicles worth it. But can going green save you money? Absolutely.
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