Credits for Clean Vehicles: Save Big By Giving Up Gas and Going Green!
With gas prices changing more than New England weather, many people are now choosing to power their vehicles with green energy. This upcoming year, the IRS is rewarding anyone who purchases a clean vehicle in 2023 or after with a tax rebate. Those who qualify can receive up to $7,500 for buying a new, qualified plug-in EV or fuel cell electric vehicle (FCV) used primarily in the US. If you hope to or have purchased a used, clean vehicle, you're still in luck! You can receive up to a $4,000 tax credit for any used green vehicle. However, before you ditch your gas guzzler, let us walk you through the requirements:
What is a clean vehicle?
Clean vehicles are methods of transport that use an alternative fuel source. Most commonly, they are powered by electricity rather than gasoline. Hybrid vehicles also qualify as clean vehicles, despite using some gas. These vehicles are considered low-emission vehicles and sometimes even zero-emission.
Which vehicles qualify for this rebate?
In order to qualify for this rebate, your vehicle must have a battery capacity of at least seven-kilowatt hours, have a gross vehicle rating of fewer than 14,000 pounds, undergo final assembly in North America, and be made by a qualified manufacturer. There are more than twenty qualified manufacturers that can be found here. If you purchased an FCV, your vehicle will qualify regardless of which manufacturer made it. An additional requirement for used vehicles is that the model must be no more than two years old. For example, if you purchase a used green energy car in 2023, the model date must be 2021 or newer.
Not a car person? Need help finding this information about your vehicle? Don't fret! To find out this information, you can check your vehicle's window sticker. It should list your vehicle's weight, battery capacity, final assembly point, and VIN.
Another point to remember regarding your green vehicle purchase is that you will only qualify if the seller reports all the required information to you at the time of the sale and to the IRS. This means you must report your name and tax ID number to the IRS to claim your credit.
Finally, the manufacturer suggested retail price, commonly known as the MSRP, cannot exceed $80,000 for vans, sport utility vehicles, and pickup trucks or $55,000 for any other vehicle. For a used vehicle, the MSRP cannot exceed $25,000. But don't worry if you have already made the investment and paid more! You may still qualify as the MSRP is not necessarily the price you paid for your vehicle but rather is the price suggested by the manufacturer.
What are the income qualifications?
In order to qualify for this rebate, your adjusted gross income cannot exceed $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for any other person filing. These numbers are different for used clean vehicles, so take a look here to see if your adjusted gross income will meet the requirements. You can use your modified adjusted gross income from the year you took delivery of your vehicle or the one before, whichever is less. However, this credit is nonrefundable, so you can't get back more credit than you owe in taxes, and you can't apply any excess credit to future tax years. This is where we come to your rescue! We can help you determine the best claim structure to receive the most from this benefit.
What are the long-term benefits of purchasing a clean vehicle?
Besides lowering fuel emissions, improving fuel economy, and cutting oil use, drivers of these vehicles will also be lining their pockets with the money they are saving long-term. Over the past four years, drivers have saved over $200 per household, and by 2030, the average owner will have saved more than $4,000. Creating a clean and sustainable future while saving money? Sign us up!
Beyond the federal savings, you may also qualify for state rebates. If you are a New Hampshire resident, click this link to determine if you qualify for additional tax rebates. And if you reside in Massachusetts, you may also want to see if you are eligible for their state's rebate by clicking here. To claim your credit, you will need to file this paperwork on your own, but if you need guidance regarding the rebate process or need help filing your taxes this season, reach out to us today.
