EV Tax Credit: What It Is, How It Works, and Do You Qualify? | The Federal EV Tax Credit Explained

You may have heard that the rules surrounding the federal tax credit for buying an EV have changed now that the Inflation Reduction Act is law. Lauren McCay of Edmunds explains everything you need to know about the new requirements, including the price limits on eligible vehicles, personal income thresholds for buyers, the new importance of where the vehicle was assembled, and the timing of your purchase as 2022 comes to an end. How do you know what vehicles qualify? And what about using the credit toward the purchase of a used EV? Lauren breaks it all down so you can do your best to take advantage of the federal tax credit of up to $7,500.

00:00 Intro
00:55 What Changed?
01:29 Requirements
02:21 American Made
03:18 New EVs
03:57 Used EVs
04:53 Timing
05:37 Supply Limits
06:12 Do You Qualify?

[edmundscars]

What new EVs excite you enough to learn the federal tax credit ins and outs to get one? Let us know in the comments below.

[bhars]

one major item I was looking for in the "do you qualify" section is confirmation that this is a non-refundable credit. this would completely disqualify people who get a tax refund which is 60-70% of taxpayers who file. May be an obvious conclusion but It should be reiterated when ever possible. Correction, even if you get a refund you can still get the tax credit as long as you had a tax liability to apply the credit to. 1040 IRS form, Line 24

[thesagacontinues]

She did a great job! This is super informative considering this bill is insanely complicated and counterintuitive. I'm glad she brought some personality to otherwise tedious content.

[jakereal]

I came here to find out is this tax credit off the price of the car and “real money” in your pocket? Meaning if I see an EV I want to buy that’s $57, 500 and I’m eligible for the max credit will the vehicle then cost me $50, 000??? She doesn’t tell you this as I had to look at another video, but the answer as I thought is NO!!!! This EV tax credit just reduces your tax LIABILITY! Meaning if after itemizing (in my case) my AGI (adjusted gross income) is say 41, 000 and I’m eligible for the full credit, my tax liability will then be 33, 500. Look at the IRS TAX tables to see the difference in what I owe filing single of $41k Vs 33.5k. I just did and this will give me a big $906 in what I owe in Federal
Taxes!! So while I’m eligible for the whole 7, 500 credit the REALITY is I’m “saving” or getting back only $906 from buying this EV. This to me is crumbs and BS! I hardly think less then $1000 off the purchase of a $57, 500 vehicle is going to
Persuade anyone in their right mind to
Buy one on that factor only!! Another government scam or false belief !!

[Shaungza]

I am thankful for watching these video because my mother in law was looking in purchasing the 2024 Toyota Prius LE.

[kakaman]

What if you don’t owe any tax at the end of the year? Do you still get that tax credit?

[lizburgess]

I believe the most important thing is your tax liability. You won't get $7500 tax credit if you owe only $2500, right?

[lovedeepbagga]

Thank you for explaining this complicated tax situation so easily.

[vonerotateca]

This didn’t answer my question about the income cap. If I buy an ev car in 2022, and I won’t know if I qualify until I file my 2022, which I won’t be able to until April 2023, can I use my adjusted taxable income from my 2021 tax filing to qualify?

[Peizxcv]

Wow, her explanations are as clear as mud

[Mike-ddbd]

It would be helpful to first make us understand what a tax credit is. Because plenty of people are it appears this tax credit does not lower the price of the car.

[georgev]

PSA: if you buy a Tesla this month, they are giving out $3750 off. Take delivery December 2022. Regardless of tax law. Model 3 and Y.

[joetrevino]

So if my last pay stub in Dec 2023 shows I paid (withheld, ) $6, 000 in federal taxes and I purchase a qualifying EV car in 2023, do I qualify for $6, 000 credit when doing my taxes = $6, 000 refund ?

[reddevil]

2 years ago I talked to my brother-in-law that electric cars is bad idea. Explain it to him thoroughly but he listened to tick tock, it's now two years that he bought it. Every little knick knack that's wrong with that car. He has to take it to the dealer. The cost is crazy. I can't wait when I see him and show him how 8 year old kids from the Congo are digging the Cobalt for the batteries by hand. And how quickly resale value of his Tesla X is dropping like a stone. Electric cars are like cell phones. Why would anybody would pay top dollar for an old cell phone when you get the new one.

[mgarcia]

Is there a limit on how many 7500 tax credits a household can get? Meaning if I buy an EV every year and the car qualifies, can I get the credit if I personally qualify?

[dearbulls]

Does the new bill mentioning anything about installing Level 2 chargers at home?

[theodorehaskins]

Thank you for posting this video. I found the information to be very helpful and informative. Thank you!😎

[Medmann]

WE just bought a used EV from a local Ford dealer. The dealer has us sign over the EV credit to them & then he chopped the credit amount from the purchase price. My question is do I need to do anything with the IRS come tax time or am I done? I think I read where I still need to fill out the IRS form 8936 even if I did time of sale EV credit, is that correct ??

[roguedogx]

1:58 now for the fun question. I could make an EV that I could sell for less than $7.5k? I doubt it, but I kind of want to look into it.

[azbat]

Will Tesla Model Y Performance have the $7500 EV tax credit in 2024, using the new mineral and assembly requirements for the batteries?