How Does the Federal Tax Credit for Electric Cars Work?

Finance Paperwork with Glasses
Many new electric vehicles are eligible for a federal electric car tax credit—it’s one of the many benefits offered by EVs! The amount of the credit varies by state; you may get a minimum of $2,500 or as much as $7,500. Not sure if you can get a tax credit for the EV you bought this year in St. Louis or St. Charles? Learn more about the models that qualify in this guide to how the federal tax credit for electric cars works.

Which Models Are Eligible for the Electric Car Tax Credit?

The electric car tax applies to many new EVs, but not all. You must have made your purchase of a new EV after December 31, 2009, and it must also:

  • Draw propulsion using a traction battery with a capacity of at least 5 kilowatt-hours (kWh)
  • Use an external energy source to recharge the battery
  • Have a maximum gross vehicle weight rating (GVWR) of 14,000 pounds
  • Meet specified emission standards
  • Be built by qualified manufacturers
  • Have a battery pack rated for at least 4 kWh of energy storage
  • Be rechargeable from an external source

Am I Eligible for a Federal Electric Car Tax Credit?

Once you’ve determined that your new EV qualifies, you need to find out if the tax credit can be applied to your taxes. First off, the vehicle must be purchased—-not leased—and driven primarily in the United States. There are also a few considerations to note when it comes to your income:

  • The amount of your electric car tax credit cannot exceed the amount that you owe in income taxes that year. For example, say you’re eligible for the maximum $7,500 electric car tax credit and you owe 3,000 in income taxes. Your electric car tax credit will be $3,000, but no more. Think of it like this: you can use your EV credit to pay off that year’s income taxes, but there won’t be any extra money going into your bank account.
  • You cannot pass the electric car tax to a second owner when you sell your EV. Only the original owner can claim the credit.

How Long Will the Federal Electric Car Tax Credit Be Available?

The electric car tax was introduced to encourage drivers to purchase more EVs—and to push manufacturers to start producing electric vehicles. The credit phases out for a given eligible model after 200,000 have been sold by the manufacturer. That’s how the federal tax credit for electric cars works to help brands make more EVs!

Save On a New EV for Sale Near St. Louis Today

We’re happy to answer your questions about how the federal tax credit for electric cars works! Reach out to a Suntrip dealership near you in Fenton. In the meantime, check out our current lease and finance specials and our comprehensive guide to EV maintenance.

 

More from Suntrup Automotive Group

  • 2024 Nissan Frontier Colors

      The Nissan Frontier is designed to help you tackle demanding jobs around the St. Louis area. It features exceptional capabilities and an impressive towing capacity so you can have confidence when you’re behind the wheel. While there’s plenty of performance to appreciate in the 2024 Nissan Frontier, you’ll find that it also offers a head-turning…

  • 2024 Volkswagen Atlas Interior

      Need a comfortable SUV with the latest amenities for your St. Louis commutes or weekend adventures? Look no further than the all-new fully-loaded 2024 Volkswagen Atlas interior. This expanded, refreshed three-row VW SUV has more cabin space and the latest interior features to enhance every drive, keeping you comfortable and connected. Learn more about the…

  • 2024 BMW iX Range

      Enjoy a futuristic and efficient vehicle that matches your lavish lifestyle when you decide to lease or finance a new BMW iX. As one of the many BMW electric models, this all-electric luxury SUV will have plenty of room for you and your passengers while offering plenty of range for you to drive around…

Suntrup Automotive Group 38.5214964, -90.3451239.