by TJ Garner
A few tax changes passed last year might cause you to turn your head — toward the local car dealership.
The Inflation Reduction Act passed by Congress last year includes tax credits for the purchase of electric vehicles. People who may be interested in buying an EV could be in for a nice tax credit for doing so. However, there are requirements, some of which are still being implemented and need clarification, to get a full or even partial tax credit. The good news is that people will have time to consider the credits, which are enacted through 2032.
The available tax credits can be broken down into three categories, and each has different credits and qualifications. It’s important to note that the credits are nonrefundable; the credit that people and businesses get back cannot be more than what is owed in taxes. Still, the credits can help make an EV more affordable.
Buying a new clean vehicle (EV or fuel cell vehicle):
This offers a credit of up to $7,500 for qualifying purchases. There are income requirements, as well as specific requirements for the vehicle. Some of the EV requirements are still being worked out; as a result, not all vehicles will be eligible for a tax credit.
Buying a used clean vehicle:
Individuals who buy a qualifying used EV can receive a portion of the sale price as a tax credit of up to $4,000. Vehicles purchased before 2023 do not qualify. The used EV must be purchased from a licensed dealer for $25,000 or less. There are also income limits and other requirements for the EV, as well as for the purchase.
Businesses purchasing a clean vehicle:
Businesses and tax-exempt organizations can receive up to a $7,500 tax credit for qualified vehicles with gross vehicle weight ratings of under 14,000 pounds and $40,000 for other vehicles. As with the other credits, there are additional requirements for the organization and vehicle to qualify.
You should consult a qualified tax professional to learn more about the specific requirements for the tax credits. To learn more, visit IRS.gov for details and requirements. You also can contact your local electric cooperative’s energy advisor to learn more about electric vehicles.
TJ GARNER is chief operating officer at Fulton County REMC