Comprehensive Guide to EV Tax Credits & Rebates in 2024

Understanding Electric Vehicle (EV) Tax Credits

Electric vehicle (EV) tax credits and rebates can significantly reduce the cost of purchasing or leasing an EV. However, new federal regulations have changed eligibility requirements, making it essential to understand how you can qualify for these incentives.

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How Federal EV Tax Credits Work

Federal EV tax credits apply to qualifying electric and plug-in hybrid vehicles (PHEVs) assembled in North America. These vehicles must also meet cost caps: $55,000 for passenger cars and $80,000 for trucks, SUVs, and vans.

• Buyers must meet income eligibility: $150,000 (individual), $225,000 (head of household), and $300,000 (joint filers).
• Starting in 2024, tax credits can be used at the point of sale at participating dealerships.
• The tax credit amount varies but can reach up to $7,500 for qualifying EVs.
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Point-of-Sale EV Tax Credits

Previously, EV tax credits could only be claimed when filing taxes. Now, a new “point-of-sale” program allows buyers to transfer the credit to a registered dealership, reducing the vehicle's upfront cost. This means even buyers with low tax liability can benefit.

EV Tax Credit Amounts & Eligibility

To qualify for the full $7,500 tax credit, an EV must meet specific battery sourcing and assembly requirements. Plug-in hybrid vehicles (PHEVs) may qualify for a partial credit depending on battery capacity.

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Leasing vs. Buying: How EV Tax Credits Apply

Leased EVs are eligible for tax credits under commercial vehicle rules, allowing for broader eligibility. Leasing companies typically pass on these savings through lower lease payments.

Home EV Charger Rebates & Tax Credits

Installing a home charging station can also qualify for a federal tax credit. Homeowners can receive a 30% credit, up to $1,000, on installation costs. Some states and utilities offer additional rebates.

State and Local EV Incentives

Many states offer EV rebates ranging from $500 to $5,000, often with less stringent eligibility requirements than federal credits. Benefits may also include carpool lane access and emissions testing exemptions.

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Utility Company Rebates

Utility companies may offer rebates for EV purchases or home charger installations. Some also provide discounted electricity rates for charging during off-peak hours.

How to Claim Your EV Tax Credit

To claim a federal EV tax credit:

1. Verify your vehicle’s eligibility and ensure your income qualifies.
2. Use IRS Form 8936 when filing your federal tax return.
3. For point-of-sale benefits, ensure the dealership is IRS-registered.

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Are EV Tax Credits Refundable?

The federal EV tax credit is non-refundable, meaning it reduces your tax liability but doesn’t provide a refund for unused amounts. However, using the credit at the point of sale ensures full utilization.

Are State EV Rebates Taxable?

Some states consider rebates as taxable income. It’s advisable to check local tax rules or consult a tax specialist.

Best Electric Vehicles for Tax Credits

With EV technology advancing rapidly, buyers have more choices than ever. Qualifying models include Tesla, Ford Mustang Mach-E, Chevrolet Bolt EUV, and Hyundai Ioniq 5, among others.