How Does The Federal Tax Credit For Electric Cars Work?

Many drivers in Plainfield and Manville have heard about the electric car tax credit for models like the Kia EV6 and Kia Niro EV. But, how exactly how does the federal tax credit for electric cars work? The federal tax credit can range between $2,500 to $7,500, depending on your vehicle type. However, keep in mind that this is a tax credit and not a rebate. That means you must owe at least $2,500 in income tax to be eligible for the credit during the year of your purchase. If that seems confusing, keep reading to learn more about how the federal tax credit can benefit you.

What Models Qualify for the Electric Car Tax Credit?

Drivers who purchase an electric vehicle in the Middlesex can qualify for a credit under under Internal Revenue Code Section 30D. The vehicle must be new and driven primarily in the United States while fulfilling the following requirements:

• Have a battery capacity of at least 7 kilowatt hours
• Have a gross vehicle weight rating of less than 14,000 pounds
• Be made by a qualified manufacturer
• FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance
• Undergo final assembly in North America
• Meet critical mineral and battery component requirements (as of April 18, 2023)
• Have an MSRP under $80,000 for vans, sport utility vehicles, and pickup trucks and $55,000 for other vehicles

How Do I Claim the Credit? 

You’ll claim your tax credit when you file taxes for the year. Submit Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles), and provide your Vehicle Identification Number. The tax credit is considered “nonrefundable.” So if you do not owe any taxes, you cannot generate a tax refund.

What is Charge Up New Jersey?

In addition to the federal tax incentives, you can also find state options as well. The Charge Up New Jersey program also offers incentives of up to $4,000 for the purchase or lease of new EVs and $250 eligible EV chargers. Due to the popularity of this program, much of this funding is quickly allocated every year. However, be sure to check the Charge Up New Jersey website to see the current status. You might find that funding is unavailable for EVs, but still available for a charging station. 

Learn More About the Electric Car Tax Credit with Bridgewater Kia 

Now you know the answer to the question, “How does the federal tax credit for electric cars work?”, but what if you still have more questions? Contact us at Bridgewater Kia in Bridgewater to see how you can take advantage of the electric car tax credit. We’d be happy to explain the benefits of electric cars and get you behind the wheel of a new model today!