Confused about the electric vehicle tax credit? Most people are. Let's try to explain it to you.
You might have gotten the impression that the electric car tax credit means $7500- in your pocket, but it is not really so.
First of all the credit is only up to $7500-. Not every car is even eligible for the full amount. Depending on the type of vehicle how many wheels it has or the size of the battery the tentative electronic vehicle tax credit can be as low 10% of the car cost or $2500-. The actual tax credit can be even lower as you can see below.
Then, there is a phase out after the manufacturer sells over 200,000 cars cutting the credit to half and to a quarter of the amount down to zero.
Also to get the credit you must have a tax liability. The credit will never be more than your tax liability less certain credits, which in some cases will mean no credit at all.
In one word don't automatically expect that your car will cost you $7,500- less than the sales price.
Some vehicles can meet the criteria for more than one credit but you can only claim one of them, so consult your tax professional as to which form is the correct one to file for you.
How do you know which vehicle is still eligible for the electric vehicle tax credit? The best is to consult the manufacturer, but also discuss this with the car dealer and your tax consultant.
Pre-owned vehicles. Not only used vehicles are ineligible, but if the car dealer puts his name on your vehicle before selling it to you, it is considered a pre-owned vehicle and you cannot get a tax credit for it anymore.
State tax credits. Check your state if there is a tax credit for alternate fuel vehicles. But beware some states also have an alternate fuel tax to offset the amount of tax the state is losing since they cannot collect the gasoline tax for these cars.
Updated December 30, 2012
Can't find what you're looking for? You can search this site here.
How will Trumps Tax Reform Affect YOU?
Check out this new calculator, to see how much you will gain or lose.
Get your exact child tax credit amount with Trump's new Family tax credit.
[?]Subscribe To This Site
Wise Tax Tips