Energy Credits Mean You Can Pay Less for Your Clean Vehicle
Save the Earth and save money? Thanks to federal tax credits, you can pay less for your clean vehicle. When you buy a qualifying vehicle (more on that in a bit), you can transfer those credits to a dealership in exchange for a lower price. This new add-on to the Clean Vehicle Credits program starts January 1, 2024.
Dealers will start registering with IRS Energy Credits Online on December 1, 2023. Once approved, they will be able to receive advance payments on the vehicle they sell. Buyers can choose whether those advance credits take the form of a down payment, partial payment on the vehicle, or cash back.
Not all hybrid, electric or fuel cell vehicles qualify for the credit, however. A clean vehicle you buy in 2024 must have at least 50 percent of its battery critical minerals originate in the United States, or in a country with a free trade agreement with the US. That qualifies you for the first half of the credit. For the second half, at least 60 percent of the battery components must come from the US or a country with a free trade agreement in 2024.
Furthermore, you can’t buy the car for resale, and its gross vehicle weight must be less than 14,000 lbs. The vehicle must be powered to a significant extent by an electric motor with a battery capacity of 7 kilowatt hours or more. It has to be able to recharge from an external electricity source. And final assembly of the vehicle must take place in the United States.
Pay Less for Your Clean Vehicle – How Much to Expect
The credit can be as much as $7,500 if your new car, truck, van or SUV satisfies both battery requirements. There are price limits for eligible vehicles: $80,000 MSRP for vans, SUVs, and pickup trucks; $55,000 for all other vehicles. And there are income limits on taxpayers applying for the credit: $300,000 for married filing jointly, $225,000 for head of household, and $150,000 for single taxpayers.
Used vehicles can be eligible for a smaller credit ($4,000 on a vehicle costing $25,000 or less). It has to two more or years old, and the buyer can’t be the original owner of the vehicle.
You can follow this link to fueleconomy.gov to see whether a vehicle is eligible for the credit.
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