Kelly Bullis: Zoom up on electric vehicle credits
Tax Tips (and other stuff)
The Inflation Reduction Act of 2022 was supposed to spur a lot of EV purchases in 2023. Were you one of those folks that jumped on the EV bandwagon in 2023? You may be eligible for some really great tax credits.
Prior to the “IRA” you could claim a tax credit for EVs and hybrid plug-ins if the vehicle had a gross vehicle weight rating (GVWR) of less than 14,000 pounds and met certain consumption requirements. The maximum credit was $7,500. In addition, the credit was only available to original purchaser of a new vehicle. Also, the credit was phased out for vehicles of a manufacturer when it sold 200,000 qualifying vehicles for domestic use.
Now, the IRA revamped rules are as follows: For new EVs and plug-in hybrids, the maximum credit remains at $7,500, but now, starting in 2023, 1. The credit is only available to folks with income that doesn’t go too high. MAGI of $150,000 for singles and $300,000 for married folks (for more details on the stupidity of “MAGI” see a prior column) 2. The credit can’t be claimed for passenger vehicles costing more than $55,000 or $80,000 for vans, sports utility vehicles (SUVs) and pickup trucks (based on manufacturer MSRP. Also, dealer fees, taxes and other fees are not counted toward that limit.) 3. The vehicle must be powered by batteries with materials that are sourced from the U.S. or one of it free trade partners (This restriction applies to vehicles delivered after April 17, 2023) 4. The vehicle must be assembled in North America.
NOTE: The prior threshold of 200,000 vehicles per manufacturer is repealed. But the vehicle must appear on the IRS approved list.
But wait! There’s more! Now purchasers of USED EVs can also claim a credit, beginning with 2023 returns. If you qualify, the maximum credit is $4,000, but limited to 30% of your cost to purchase it.
Special rules for used EVs… 1. The credit is only available to folks with MAGI under $75,000 for singles and $150,000 for married folks 2. The vehicle can’t cost more than $25,000 3. The vehicle must be at least two years old 4. The purchase must be the first sale of the vehicle from original owner and by a licensed dealer (no private party sales) 5. You can only claim this credit once every three years.
In 2024, you can get the tax credit immediately at the point of sale by a qualified dealer.
Now that Elon Musk has committed to building a lot more charging stations across the country, maybe getting an EV will be a good choice for you?
Have you heard? 1 Chronicles 12:17 says, “David went out to meet them, and answered them, ‘If you have come peaceable to me to help me, my heart will be united with you.’”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.
