Starting 2024, EV Buyers Get $7,500 Tax Credit Instantly
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The tax break for buying an electric vehicle is being accelerated, allowing buyers to receive up to $7,500 off the purchase right at the dealership.
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The changes to the federal electric-vehicle tax credit in the 2022 Inflation Reduction Act aim to encourage more people to shift to greener vehicles.
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The new rules create confusion for buyers, as the list of eligible vehicles keeps changing and income limits have been imposed.
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Buyers need to consider various factors, such as the eligibility of the vehicle, their taxable income for future years, and their comfort with leasing.
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Consumers who want certain vehicles should buy before year-end, as the list of eligible vehicles may shrink in 2024 due to new rules on vehicle parts and battery manufacturing origin.
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The income limits of $150,000 for individuals and $300,000 for married couples filing jointly may affect the decision to buy this year to get the credit.
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The new rules do not apply to leases, but lessees should ensure that the federal tax credit is passed on to them by the manufacturer or lender.
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Taxpayers who choose the point-of-sale rebate program still need to report their EV purchase on their tax return and may have to pay back the credit if their income exceeds the limit.
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Buyers should also consider state taxes, as some states offer additional incentives beyond the federal EV credit, while others impose higher registration fees and taxes on public EV charging.
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