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Electric vehicles usually have a higher price tag than traditional gas guzzlers. But the federal government has a credit in place to help you go green. Here’s everything you need to know about the electric vehicle tax credit.
The electric vehicle tax credit helps lower the upfront cost of buying a hybrid or electric vehicle. If you qualify, the credit lowers the amount of taxes you owe dollar for dollar.
The electric vehicle tax credit hasn’t changed for the past three years. The credit ranges from $2,500 to $7,500 depending on the size of your vehicle’s battery.
Use this chart to find your credit amount:
If my battery is this many kilowatt-hours… | …then my electric vehicle tax credit is.. |
---|---|
4 | $2,500 |
5 | $2,917 |
6 | $3,334 |
7 | $3,751 |
8 | $4,168 |
9 | $4,585 |
10 | $5,002 |
11 | $5,419 |
12 | $5,836 |
13 | $6,253 |
14 | $6,670 |
15 | $7,087 |
16 or more | $7,500 |
The electric vehicle tax credit has quite a few limitations you should be aware of:
You qualify for the electric vehicle tax credit if you meet these requirements:
If you qualify for the credit, your car manufacturer should give you a certificate explaining the make, model, year of your vehicle and how much your credit is worth.
Alternative-fuel vehicle | |
Fuel-celled vehicle | |
Gas-powered vehicle you converted to electric | |
New plug-in electric or hybrid vehicle | |
Used hybrid or electric vehicle |
Vehicles that qualify for the electric vehicle tax credit, include:
Follow these four steps to calculate your electric vehicle tax credit:
If your car manufacturer has sold this many electric vehicles… | …and it’s in this calendar quarter of the phase out process… | …then you’ll receive this much of your electric vehicle tax credit… |
---|---|---|
Less than 200,000 | N/A | 100% |
200,000 or more | Quarter one or two | 50% |
200,000 or more | Quarter three or four | 25% |
200,000 or more | Quarter five or more | 0% |
For example, if you qualify for a $7,500 tax credit but the car manufacturer is in the third quarter of the phase-out process, your credit is reduced to $1,875.
You use Form 8936 to calculate the electric vehicle tax credit. This form consists of three parts:
Once you fill out Form 8936, you’ll report your credit amount on Form 1040 if you bought your vehicle for personal use or Form 3800 if you bought it for business use. Or you can use it to pay down an existing alternative minimum tax bill if you have one.
There are two other tax credits and deductions you should look into if you qualify for the electric vehicle tax credit:
If you bought a plug-in electric or hybrid vehicle this year, the electric vehicle tax credit is a great way to reduce your tax bill — and indirectly lower your upfront costs. But it only works if you owe taxes because none of the credit is refundable.
Before you file taxes, consider hiring a professional or shop around for an online service that can help you save the most money on taxes.
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