There is an IRS credit that currently offers around $7,500 for those qualifying in the IRS credit requirements.

You can be covered by the $7,500 IRS credit, especially if you are planning to purchase an electric vehicle.

The Internal Revenue Service gives the $7,500 credit if the applicant has had an income of less than $150,000 in 2021 or $300,000 dollars for couples. However, the credit would only be applicable for electric vehicles with a value of up to $55,000 or up to $80,000 for trucks.

In addition to the cap on the value of the electric vehicles, the $7,500 will be gradually reduced for each requirement the car does not meet.

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IRS Credit Requirements

To qualify for the $7,500 IRS credit, you must buy a new, qualified plug-in EV or fuel cell electric vehicle. It can also be available to individuals and their businesses.

The purchased electric vehicle must also be for personal use, not for resale, and be primarily used in the United States, according to the IRS website.

Heads of households looking to apply for the IRS credit should have their modified adjusted gross income of $225,000.

Meanwhile, qualified vehicles for purchase include an electric vehicle with a battery capacity of at least seven-kilowatt hours; have a gross vehicle weight rating of fewer than 14,000 pounds; and be made by a qualified manufacturer.

In addition, the manufacturer's suggested retail price for the vehicle must not exceed $80,000 for vans, sport utility vehicles, and pickup trucks. For other vehicles, it must not exceed $55,000.

Used EVs should at least be two model years older than the calendar year it was purchased. Subsequent owners will also be ineligible as the tax credit will apply only once in the vehicle's lifetime.

The eligibility for modified adjusted gross income for used cars also differs. Single tax filers should have $75,000 modified adjusted gross income while those filing jointly have $150,000.

For the head of households, the eligible modified adjusted gross income is $112,500.

The IRS credit application can be submitted with Form 8936 with your tax return, including the VIN for the purchased electric vehicle.

The full $7,500 tax credit will be available regardless of battery origins until March 2023.

Electric Vehicle Tax Credit

In August 2022, U.S. President Joe Biden signed into law the Inflation Reduction Act of 2022, which aims to make electric vehicles a little more attainable. It was considered to be one of the most ambitious climate legislation in the history of the United States.

The law has allotted more than $369 million for climate action, while another part of the budget is funneled for ramping up tax credits for the purchases of electric vehicles.

The electric vehicle tax credit is a nonrefundable tax credit and will be solely offered to those eyeing to buy "clean" vehicles.

The amount that the EV buyer will get from the tax credit will depend on the car's battery capacity, ranging from $2,500 to $7,500.

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This article is owned by Latin Post.

Written by: Mary Webber

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