EV Tax Credits: Everything You Need to Know for 2024 | Eligibility, Incentive Amount & More

EV Tax Credits: Everything You Need to Know for 2024 | Eligibility, Incentive Amount & More

NICK YEKIKIAN: If you’re in the market for an EV or even a plug-in hybrid, you’ve probably heard something about a federal incentive we call the EV tax credit. But some big changes have kicked in this year, starting with the fact that as I’m filming this, barely any cars qualify for the full credit.

But don’t worry, there’s some good news for shoppers too. I’m going to explain what’s changed with the tax credit, how to make sure you qualify, and some pro tips for buying or leasing a new EV in 2024. Here are the basics. If you’re not familiar with the EV tax credit,

It’s a way of trying to incentivize Americans to choose an EV over a gas car. Basically, the federal government will give you up to a $7,500 break on your taxes for buying an electric car or a plug-in hybrid. The trick is that you’ve got to meet some income requirements,

And the car you’re buying has to meet certain criteria to be eligible. But when the clock ticked over to midnight on January 1 of this year, the rules changed. The new regs actually make the tax credit a lot more useful if you’re buying a car, and they also

Had limitations to which cars qualify. But before we get into the good news and the bad news, it’s important to remember that everything I’m talking about applies to buying an electric car either with cash or on a loan. We’ll get to leasing a little bit later.

Quite a bit has changed in 2024, and it’s mostly good news. The first thing to know is that you can now essentially turn your tax credit into a discount right there at the dealership. In the past, you only got your money back after you filed your taxes for the year.

As long as you meet the income requirements and the car qualifies, you can transfer the credit to the dealership and have it applied to the price of the car right there and then. But if your modified adjusted gross income is above any of the limits you see on your screen right now,

You’re going to have to pay the IRS back when you file your taxes. Stay with us. We’re not done with tax talk just yet. I know, I know, but this is must-know stuff. In the past, you could only use the full tax credit if you owed more than $7,500 on your taxes.

This year, you just have to worry about your income. For 2024, if you apply the full $7,500 to the purchase of an EV but wind up owing less than that in taxes at the end of the year, the IRS isn’t going to come after you to pay the difference. Phew.

The dealership you’re buying from does need to submit something called a Time of Sale Report to the IRS when you buy your EV, so make sure you ask for a copy of that when you purchase your car. I swear we won’t be talking about the IRS anymore, thank goodness.

The last big change for 2024 is something labeled as the foreign entity of concern, and we’ll get into that in a second. Requirements for EVs and plug-in hybrids to qualify for the tax credit have gotten a little bit stricter in 2024. For an EV to qualify for the full $7,500,

It needs to tick a few major boxes. The first is the final assembly of the vehicle must be in either the US, Canada, or Mexico– no ifs, ands, or buts about that one. That alone will get you half of the tax credit, a cool $3,750 big ones.

The second requirement and the one that knocked a lot of cars off the list for this year is related to the foreign entity of concern thing we just mentioned. This rule says that at least 50% of the batteries EV components must be either manufactured or assembled in the United States

Or in a country that has a free trade agreement with the US. That’s a big deal because a lot of these EVs use batteries that don’t meet that requirement manufacturers are scrambling to ramp up battery production in the US. But we don’t know how long it will take for those batteries

To make it into cars on the road. The last box to tick is the pricing requirement. If you’re purchasing an SUV, a van, or a pickup truck, those cars need to have an MSRP of less than $80,000. Any other qualifying vehicle must have an MSRP of less than $55,000–

Think sedans, coupes, hatchbacks, and so on. We want to make it abundantly clear that this is a hard line on MSRP. What’s that? It’s the number at the bottom of the window sticker. Your dealership can’t help you out by lowering the purchase price with incentives or discounts.

But things like destination fees or any other fees, taxes, charges along with dealer-installed add-ons– those don’t count. If the EV you want to buy happens to meet all of these criteria, you’re in luck. It will then qualify for the full tax credit, and you’ll get the full $7,500 greenies.

After all that, which cars are still eligible for the full tax credit? As it turns out, not that many at the moment. The list of cars that qualify for the full $7,500 bucks is super short. One of them is a plug-in hybrid minivan, and two are the Bolt and the Bolt EUV,

Which Chevy stopped making after 2023, so they’ll be pretty hard to find as new cars. Here’s the list of cars that qualify for the full tax credit. As of right now, these are the only EVs that qualify. Before you go shopping, it’s worth checking back on an updated list,

Like the one on the Edmunds website, for example. A handful of other cars qualify for the partial credit of $3,750, and they’re on the full list. It’s also worth noting that I am in the past, and you are in the future. So if you find yourself here in the middle of 2024

Or closer to the holidays, you might want to click the links in the description for more up-to-date info. Things are changing all the time, and I promise you we’re keeping up. Just click the link. Everything we’ve laid out so far is good to know if you’re buying a car, but leasing an EV

Is a slightly different ballgame. As of right now, there’s a little loophole that lets the originator of the leas– that’s the entity that finances you– take the full $7,500 tax credit on a leased EV. It doesn’t matter where it’s made or where the battery comes from.

All those rules go right out the window– kind of fun, right? But here’s the thing. There’s literally no guarantee that money will be passed on to you. It’s entirely up to whoever gives you the lease. The hard part is finding a dealership and a financier

That’s willing to play ball and send the extra money your way. Some automakers will advertise the credit on their Special Offers page, so be sure to check those out. That’s why doing your research is important, people. Let’s say you’ve watched me ramble for the last however

Many minutes and you actually want to do it. Make yourself a little checklist. Make sure your income is below the limit set by the government, find an EV that qualifies, especially if you’re buying, and if you’re leasing, find a dealership that’s going to do its best to help you out.

Don’t be afraid to shop around. Then decide if you want the credit on your taxes or at the time of sale. Remember, it’s not worth taking on your taxes if you might owe less than $7,500 when April rolls around. Last, make sure the dealership files the Time of Sale Report

And gives you a copy. And just like that, you might have a new EV in your garage. Thank you very much for watching. Like the video, subscribe to the channel, and let me get out of this darn rectangle. How to make sure you qualify and some pro tips– I blew it.

Maybe a little bit faster? The $7,500– oh, I got to do it again. Can I get a little bit faster? If you’re in the market– oop– but when the clocked– ugh. It’s still too slow somehow. Should I read slower? All right.

Looking to take advantage of federal tax credits on your brand new EV? The guidelines are constantly evolving, as are the vehicles eligible to take advantage of the available incentives, and it can all be a bit hard to follow. In this video, Edmunds’ Nick Yekikian does a deep dive into the current state of EV tax credits for 2024, including eligibility requirements both for vehicles and buyers, how much to expect, and more.

Electric Vehicle Tax Credits 2024: What You Need to Know: https://edmu.in/3HPbDVI