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#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT HOW TO#
#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT UPDATE#
#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT FULL#

The new guidance is retroactive to January 1, 2023. For automakers and consumers, that means that some SUVs are eligible for EV tax credits, where they weren't previously. SUV EV Classification ChangeĪdditionally, to address some of the ongoing confusion around vehicle classification, the Treasury and the IRS released guidance saying that it will now use criteria based on the Environmental Protection Agency’s (EPA) Fuel Economy Labeling Standard to determine whether a vehicle is a car or an SUV. This guidance might help you decide when it’s best (tax-wise) to buy an EV. The Department of Transportation also has a tool on its website where you can enter the vehicle identification number (VIN) of the electric vehicle you're interested in to determine its eligibility for the EV tax credit.

#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT UPDATE#

The IRS says that it will continue to update this list. The agency also regularly updates its own list of eligible EVs purchased in, or after, 2023.

There are also answers to frequently asked questions about the EV tax credit and which cars qualify on the IRS website. That information includes the Department of Energy’s page on electric vehicles that have final assembly in North America.

The IRS and the Treasury Department have published information designed to help you know whether the vehicle you want to buy will qualify for an EV tax credit under the Inflation Reduction Act. And in case you were wondering, “used” or “previously owned” for purposes of the EV tax credit, means that the car is at least two years old.

Also, if you buy a used clean vehicle, it will only qualify for the tax credit if it costs $25,000 or less.

For clean cars to qualify for the EV tax credit, the MSRP can’t be more than $55,000.

Vans, pickup trucks, and SUVs with a manufacturer’s suggested retail price (MSRP) of more than $80,000 won’t qualify for the credit. But the North American assembly requirement (more on that below), and price caps, also mean that several popular clean vehicles don’t qualify for the EV tax credit. Of course, the EV tax credit income limits mean that some high-earning buyers won't be able to claim the credit. Which vehicles qualify for the electric vehicle tax credit is complicated for 2023.

For all other filing statuses, the EV credit income limit is $150,000.

And, if you file as head of household and make more than $225,000, you also won’t be able to claim the electric vehicle tax credit.

The EV tax credit income limit for married couples who are filing jointly is $300,000.

If you’re single, and your modified adjusted gross income is over $150,000, you won’t qualify for the EV tax credit.

You have to buy the "clean vehicle" for your use (i.e., it can be purchased for resale) and use it primarily in the United States.

Some commercial clean vehicles can also qualify - depending on weight.

Under the IRA, the EV tax credit applies to any “clean vehicle.” So, a hydrogen fuel cell car, for example, or a plug-in hybrid vehicle with 4-7 kilowatt hours of battery capacity, could qualify.

However, a previously owned EV can’t qualify if it’s purchased for resale.

Some Used Electric Vehicles Are Eligible: Used EVs (i.e., previously owned "clean vehicles" that are at least two years old) have a separate tax credit of either up to $4,000 or 30% of the price of the vehicle, whichever is less.

Vehicles placed in service on April 18 or after that meet either the mineral or battery component requirements will be eligible for a tax credit amount of $3,750.

#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT FULL#

But, vehicles placed in service on April 18, and after, that meet both battery and mineral component requirements, will be eligible for the full $7,500 credit. How Much is the Credit? The exact 2023 EV credit amount depends on when you placed the vehicle in service and whether your chosen electric vehicle meets battery and mineral component requirements (more on battery and mineral components below). The exact amount of the credit is based on a calculation that considers factors like the vehicle’s sourcing and assembly (more on sourcing requirements later). The tax credit is taken in the year that you take delivery of the EV. How the 2023 Federal EV Tax Credit Worksįor EVs placed into service in 2023, the up to $7,500 EV tax credit is extended for 10 years - until December 2032.

#WHICH HYBRID PLUG IN CARS QUALIFY FOR TAX CREDIT HOW TO#

Also, you need to know how to claim the EV tax credit on your federal tax return. So, it's important to know how the 2023 credit works and which vehicles currently qualify for the EV credit, according to the IRS. Despite the confusion, electric vehicle tax credits can benefit some consumers.