EV credit is a nonrefundable electric vehicle tax credit offered to qualifying vehicles. IRS credit “up to” $7,500 under internal revenue code section 30D and is available for both individuals and businesses. To claim the credit you simply file Form 8936 when you file your federal income taxes. The amount you get will be based on critical minerals requirements and battery components requirements of the car. Also, for you to qualify, you need to primarily use it in the U.S. and buy it for your own use and not for resale. Also, your adjusted gross income can’t exceed $300K if filing jointly, $225K if filing for heads of households, and $150,000 for all other filers.
The sellers are required to report your name and taxpayer identification number to IRS, otherwise you won’t be eligible to claim the credit. Make sure this information is asked and given. For vehicles to be eligible for the Clean Vehicle Credit, final assembly must have been done in North America. In general, North America includes the United States and Puerto Rico, Canada, and Mexico for purposes of determining the location of final assembly.
Also, used cars are now eligible. Beginning in 2023, qualifying used EV purchases can get you credit of up to $4,000 if eligible. Credit can only be claimed once every three years, car model must be at least 2 years old, purchase must be under $25,000 or less, and it must be first transfer of the vehicle. For used vehicle credit, your adjusted gross income can’t exceed $150K if filing jointly, $112.5K if filing for heads of households, and $75,000 for all other filers. The IRS urges taxpayers to review the list on the FuelEconomy.gov website to see what vehicles qualify for the new credit. It is also recommended to ask your dealer for verification as well.
Before you leave dealership with your new EV, make sure you got all the documents you need. You need TIN (taxpayer identification number) of the seller as well as the name, data of sale and the price, verification of the tax credit amount, clean vehicle’s VIN, vehicle’s battery capacity, verification that taxpayer is the original user, and statement of declaration from seller under penalty of perjury.
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