The recently signed Inflation Reduction Act included a lot of green provisions. This podcast discusses the new additions to the electric vehicle credit, specifically the purchase of used electric vehicles.
HOW DOES THIS CREDIT WORK?
- Beginning in 2023, the credit for previously owned electric vehicles is the lesser of $4,000 or 30% of the vehicle purchase price.
CAN ANYONE TAKE THE CREDIT?
- There is an income phase-out in order to take the credit. The credit is allowed for those with adjusted gross income under $150,000 for married couple and $75,000 for single individuals.
- This income limit van be met in the current year or the prior year.
ARE THERE OTHER LIMITATIONS?
- Yes there are. The credit is limited to used electric vehicles with a sales price of $25,000 or less with a model year that is at least two years earlier than the current calendar year. So when this takes effect in 2023, the vehicle has to be a 2021 or earlier.
- The vehicle has to be purchased from a dealer – so it appears no private party sales.
- Lastly, the credit can only be taken once every three years.
DOES A PERSON NEED TO FILE A TAX RETURN TO GET THE CREDIT?
- Not necessarily. The credit can be taken on the tax return, but there may also be an option to have the credit transferred to the dealer to reduce the amount owed beginning in 2024.
Be sure to talk to one of our professionals if you have any questions about the credit for used electric vehicle.
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.
