A Consumer Reports survey in 2021 found that 71 percent of Americans expressed interest in buying or leasing an Electric Vehicle. If you are in the market for a new electric vehicle, tell your tax team at BakerStarrett, LLP, as the purchase may impact your tax return.
In 2009, Congress passed legislation creating the EV Credit. The law allows taxpayers who purchase electric vehicles to claim a tax credit on their personal tax return. This credit can be as high as $7,500, but it may be as low as $0, so we recommend careful tax planning as part of your purchase decision. Also note that the EV credit is a nonrefundable credit. Depending on your tax situation, you may not receive the full benefit of the credit in a single tax year, and instead may need to carry the benefit forward to future tax years.
You can visit https://fueleconomy.gov/feg/taxevb.shtml for a listing of vehicles and the expected credit by vehicle make and model. Note that there are no longer credits available for Tesla and GM vehicles. EV credits for Toyota vehicles will begin a phase-down starting in October of 2022 because Toyota sold its 200,000th EV in June of 2022.