2023 Electric Vehicle Tax Credit Changes and What Vehicles Still Qualify? Explained by a Tax Pro
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- čas přidán 22. 08. 2024
- Today I try and explain how the tax law has changed over the past year and how this will greatly shape the EV industry. I’ve run across a lot of misinformation regarding EV tax credits. Since I’m a tax accountant, I thought I’d help clear up and provide the facts. I also provide an update on recent Tesla price changes.
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It is good to see you can still also get a tax credit on a Plug In, they are just so much more convenient than a BEV.
This guy going places! Literally and figuratively 🚙
😂
I think that there is a tendency to overemphasize certain aspects of EV shopping that is not in tune with a majority of shoppers, and I'd be curious to hear your thoughts. The EV tax credit is definitely a big attraction for people, just like rebates and other sales that temporarily raise awareness and interest in a certain model or type of vehicle. However, when you're buying a $50-70,000 vehicle, is a $3750 tax credit that will only apply to a certain percentage of people and that you have to wait you file your next tax return going to push a majority of buyers from one vehicle to another?
While a Tesla Model Y seems on paper to be the most logical choice for all the reasons you mention, there are so many more factors that go into which vehicle a buyer chooses. If it were just a matter of specs on paper, price, and the charging network, it would be easy to think that all non-Tesla automakers are just wasting their time. However, there is plenty of interest and demand to go around, and companies like Ford have not found the threshold of how many Mustang Mach-E and F-150 Lightnings it can produce and sell.
Finally, I question how much of a factor the charging network has on the average person. I know that there are all sorts of scenarios out there, but the road tripping capability of EVs risks being overstated by those whose mission in life is to produce road-tripping videos with EVs. Personally, I haven't driven more than about 200 miles round trip since the summer of 2021. While I prefer to road trip on vacations, most of the people I know prefer to fly when it comes to traveling more than a few hours away. The CCS fast-charging situation is better than it was a year ago, and a year from now, my guess is that it will be better by a greater increment. Apartment buildings, commercial parking structures, and hotels are adding Level 2 chargers. The charging situation is improving.
Bottom line: if I were shopping now (post Apr 18), I would not have the Tesla Model Y at the top of my list. I would use the partial loss of the tax credit as leverage against the dealer to see if I could get something off the sticker price. If the Model Y was my only choice in the EV realm I'd likely purchase a gas vehicle.
The tax implications of buying a new EV were extremely important for our decision of what car to buy. We got a VW ID.4 - and we specifically went looking for individual cars, checking their VIN #'s, to insure that they would qualify for the credit. It was surprising how many ID.4's on the lot didn't qualify. Of course, the dealer will never tell you that. Definitely do your homework on this issue - it could cost you $7,500 if you don't!!!!
Any updates on used EV's? The prices are dropping fast since last year!
You could have the nicest car in the World and just think you cannot drive it, then it would not make any sense. That is the problem with all other cars except TESLA, which cannot get charging, full range anxiety, charging stations not working, or there are 1 or 2 charging stations and there are 20 cars waiting in line to be charged. If a charger has 2 cables (chadmo, and CCS) they misrepresent as two chargers. It is incredible as to how many chargers are down and not working. very unreliable.
With Tesla chargers everywhere, with 20+ charging stations, (some places have as many as 50 chargers), you always can get your car charged. They also have 99.5% reliability. Tesla cars are a lot more efficient giving you a better range than many others. Yes! the Tesla cars are not the best looking nor they are as quite as the competition. But, just put in the navigation and you can drive worry free with all the charging stations that you need to charge come up on the map.
Like I said before, you can have the best pen, but if it cannot write, it does not mean much. Currently it is inevitable that you cannot buy anything other than TESLA, if you want to travel worry free.
I guess Elon had a plan - 1) Car should be very powerful, to put a smile on your face; 2) Needs to have the highest safety, so families love it; 3) Need to be able to go anywhere worry free with the Charging network, as we are not used to going to gas stations with out gas, for most part.
Inflation reduction act. Someone please tell me how they are reducing inflation. They always name these bills the opposite of what they are doing.
Nice since I file a 1099k form it should then swallow the money I owe which is usually less the 7500
It reduces your total tax liability, regardless of how much or how little that is already paid, by up to $7,500. I think I referenced the specific line on the tax return it reduces in the video.
Two questions,
1. Can the tax credit be claimed every year for a new EV?
2. Can my wife and I both buy EVs and get two EV tax credits, one per vehicle in the same year? We will have just over $15k in Fed tax liability.
Thank you so much for your insight! I understand this is not tax advice.
Yes and yes
Thank you! This is what I thought but then played pickle ball with a friend and he thought differently so I began panicking after buying our second M3.
Have a great weekend!
If you have a tax liability of less than $7500 do you get a reduced tax credit? Thanks for your informative videos.
Yes, the credit can only be as high as the tax liability for the year.
Since I don't have tax liability currently, should I go exempt for 4months to take advantage of this credit to build a liability?
What about the used elec car credit?
Can I use tax return 2022 if I purchase EV 2023?
No it’s based on what the income will be in the purchase year. So 2023 will be 2023 tax return
Hi @EV Motoring, My Tax Accountant said its worth it for me to get the Tesla because i do uber on the side and could get the whole car as a tax credit over an X amount of years. Whats your thoughts? Thanks
The business tax deductions depend on how much you use the vehicle for business vs personal use. I would recommend discussing the use cases further and comparing models since the Model Y can be specked with a third row.
@@EVMotoring He mentioned i had to make a minimum of $2800 in order for me to take advantage of this incentive. Adjusting our withholdings with our fulltime jobs. Could we theoretically get 5k+ on our income tax returns for 5 years? This is what I understood he was saying anyway.. thanks
So, since it's not a refundable credit, if I don't owe any taxes and normally get a refund, I will lose the credit - I'd have to adjust my withholding to aim to own around $7500 to get this credit?
The most you can get is based on line 24 of your 1040. Total taxes assessed. It has nothing to do with how much you paid in.
@@EVMotoring Ah, so if line 24 is greater than $7500, I will get the credit. It's about how much taxes I owe based on income, before how much I've had withheld/paid is brought into the equation. Thank you!!
@@julielee4331 right, if line 24 is $6,800 then you get $6,800 of the credit
This is soooo confusing and makes me not want to support such vehicles... Ugh! I wanted to buy a Tesla but I guess not.
Not really confusing though. It's a tax credit not a tax refund! So if you have to pay in at tax time, you can use the 7500 tax credit towards.