Federal EV Tax Incentives Explained

Diving into an electric vehicle can seem daunting, especially when the norm of gasoline-powered vehicles is all you've ever owned. To facilitate the growth of the EV industry and move toward a more sustainable future, the federal government is easing the cost of buying one with tax credits. Tax credits started in the 2010s to increase interest in cleaner energy vehicles, and after the COVID-19 pandemic, became an important tool to boost automotive manufacturing efforts in the United States. 

The models that qualify for the U.S. federal tax credit do change as manufacturers work to meet new requirements, but EV tax credits, valuing up to $7500 can be claimed in 2 ways when buying a new electric vehicle.

1. When filing a tax return for the year you purchased your EV,  you also file a form about your EV purchase. This credit cannot exceed owed taxes and cannot apply to the following year's taxes. 

2. Redeem the credit at the time of purchase by transferring the tax credit to the dealership. This will take the credit amount off your vehicle's price.

Leasees and used car buyers aren't left out of the savings. If you choose to lease an EV, the dealership can claim the federal tax credit and pass those savings on to you by reducing your monthly payments. Used car buyers who purchase an EV can get a credit worth up to 30 percent of the purchase price, up to $4,000. 

There are price and income caps for the federal tax credit, limiting this benefit to those who might not otherwise find an electric vehicle accessible. For more information about requirements, limits, and redemption of federal EV tax credits, contact the Heritage Hyundai Towson sales team. We can get you started on your all-electric journey and help you navigate the change with ease.