Welcome to this month’s Ask the CFP®! Today we are going to be discussing Electric Vehicle Tax Credits. Electric vehicles are revolutionizing the way we drive and helping to reduce our carbon footprint. An EV will eliminate your gas purchases, and ongoing battery innovations are reducing environmental impacts. But did you know that EVs can also save you money on taxes? That’s where the EV tax credit comes in.
The EV tax credit is a financial incentive provided by the government to encourage people to switch to electric vehicles. It works like this: when you purchase an eligible EV, you can claim a tax credit on your federal income tax return, reducing the amount of tax you owe.
The amount of the tax credit varies depending on the capacity of the vehicle’s battery. Generally, the federal tax credit ranges from $2,500 to $7,500.
In addition, some states also offer EV tax credits. If your state requires annual emissions testing, that expense is eliminated for electric vehicles as well. EVs are easy to charge at home and there are additional tax credits available for the cost and installation of the charger.
Now of course, to claim the tax credit, the vehicle must meet certain criteria. First, only fully electric vehicles and a small number of plug-in hybrids qualify. The vehicle’s final assembly must also take place in the U.S. and there are evolving U.S.-based material sourcing requirements.
It is important to note that if you purchase a used EV, you can still get a tax credit if the car meets certain battery and mineral requirements. Leased vehicles may even qualify for the tax credit, also.
In conclusion, the EV tax credit could be a fantastic opportunity to save money on your tax bill. If you are in the market for a new vehicle, review what tax credits might apply to you and consider going electric to take advantage of these tax incentives.
consider going electric to take advantage of these tax incentives.
If you have a question about this topic or a suggestion for a future video, please send it to kluetters@monetagroup.com. Thanks for watching; we’ll see you next month.
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