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Why You Should Consider An EV Or A Plug-in Vehicle

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Summary

If you're in the market for a new vehicle, you might want to start taking a serious look at the EV and Plug-in market.

Not only are you potentially saving money by paying electricity instead of gas, you might also qualify for discounts over $10,000 as well as other benefits

Federal Tax Credit

Before 2023, the federal tax credit was capped to 200,000 cars sold per manufacturer, meaning that the popular EV vehicles like Tesla and Chevy no longer qualified for the credit. However the recent Inflation Reduction Act of 2022 has reinstated the federal tax credit for 2023 - 2032 but with new rules. Here are the new rules to qualify for the credit:

Income Eligibility Your adjusted gross income may not exceed:

  • $300,000 for married filing jointly
  • $225,000 for head of household
  • $150,000 for others

Note If you exceed the income cap, here are some ways still able to take advantage of this credit:

  • Have a family member who meets the requirement purchase the vehicle with you as a co-owner. They can either take the credit or pass the savings to you. However you should consult a tax professional before attempting to transferring the ownership to only you.

Vehicle Eligibility For a vehicle to qualify, there are new requirements. Here are 3 that I think are the most important:

  • $80,000 MSRP cap on SUVs/vans/pickup trucks.
  • $55,000 MSRP cap on other vehicles, such as sedans and hatchbacks.
  • Vehicle must be assembled in North America.

If you want to understand the exact requirements to qualify a vehicle, the details can be found at IRS's official website.

You can check this list to see all qualified vehicles.

California

If you're in California, you're in luck because there are more EV incentive that can reduce your tax burden. You can search it here. Here, I'll mention the one that I think is the most important.

Clean Vehicle Rebate Program (CVRP)

The CVRP program provides another $2,000 to $7,500 credit depending on your vehicle. However there is another income eligibility.

Income Eligibility

  • $135,000 for single filer
  • $175,000 for head of household
  • $200,000 for joint filers

Regardless of income bracket, you might also be eligible for the High Occupancy Vehicle Decal (HOV). However, it is a bit trickier for Fuel Cell vehicles. You can check the exact income requirements here.

Again, if you do not qualify, you can consider the workaround that I mentioned above.

Conclusion

Whether or not you're in the market for a new market, you should take these EV incentives into consideration as they can significantly cut down your final cost. Feel free to use our vehicle calculator to see how that will affect your purchase power and also our tax calculator to see how they can directly help reduce your tax burden.