• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Mortgages
    • Mortgage Insight
    • FHA Loans
    • Check Rates Now
    • Check Eligibility
  • Home Services
    • Home Security
    • Home Warranty
    • Solar
  • Debt
    • Debt Insights
    • Debt Relief
    • Debt Relief Quiz
  • Personal Loans
    • Find Personal Loans
    • Prequalify for Personal Loans
  • Insurance
    • Insurance Tips
    • Auto Quotes
  • Credit Cards
    • Travel Credit Cards
  • Articles
Wise Money Life

Wise Money Life

Helping Consumers Make Wiser Financial Decisions

A Guide to the Electric Vehicle Tax Credit

December 23, 2022 Leave a Comment

Around one-quarter of Americans say that they are planning to purchase an electric vehicle as their next car. There are many reasons for this, including rising gas prices and the need to implement positive environmental changes. The reality is that electric vehicles emit just a third of the greenhouse gases of gasoline-powered cars.

Another reason why so many Americans are interested in purchasing an electric vehicle is due to the availability of the electric vehicle tax credit. The newly-named Clean Vehicle Credit for new electric vehicles had been due to expire at the end of 2022 but has been renewed under the Inflation Reduction Act, signed into law by President Biden in August.

TRENDING: See the Top Cash Back Rewards Credit Cards of 2023

In this blog post, we will highlight what you need to know about the EV tax credit, including what it is and how it will work from 2023 onwards. Let’s get started.

What Is the Electric Vehicle Tax Credit?

Put simply, the electric vehicle tax credit (now officially known as the Clean Vehicle Credit), is a tax credit offered to taxpayers who purchase qualifying plug-in electric vehicles. Another tax credit that has been extended under this law is the federal solar tax credit.

For the 2022 tax year (referring to taxes paid in 2023), the tax credit ranges from $2,500 to $7,500. The eligibility for this credit depends on a number of factors, such as whether or not you own the vehicle, the weight of the vehicle, and how many vehicles the manufacturer has sold.

Going forward in 2023, a number of changes to this tax credit will occur under the Inflation Reduction Act. For example, the new credit allows for a maximum of $7,500 for new EVs. In the case of used EVs, the credit is limited to 30% of the sale price (up to a maximum of $4,000).

How Does It Work From 2023?

A number of changes to the tax credit will go into effect from January 2023 (and last until 2032). One of these is that the manufacturing cap has been lifted, which allows more EVs to qualify than in previous years. As noted above, used cars will be eligible for the first time in 2023.

A new income eligibility cap also comes into place in 2023. In order to qualify for a new car tax credit, the limits on the modified adjusted gross income that a taxpayer can make are:

  • Single – $150,000
  • Head of household – $225,000
  • Married (filing jointly) – $300,000
  • Married (filing separately) – $150,000

The modified adjusted gross income limit for taxpayers buying used EVs is 50% of the above amounts (i.e. $75,000 for a single person).

Your Guide to the Electric Vehicle Tax Credit

The bottom line is that the electric vehicle tax credit expansion is excellent news for people planning to purchase an electric vehicle and go green. Buying an EV is a great way to play a positive role in protecting the environment while also saving money.

TRENDING: See the Top Cash Back Rewards Credit Cards of 2023

Like this blog post on the electric vehicle tax credit? Be sure to check out our other informative articles, such as this one, on a wide range of interesting topics here at WiseMoneyLife.com.

Share the insight
     

Filed Under: Articles, Guide

Reader Interactions

Leave a Comment Cancel

sidebar

Blog Sidebar

Popular Articles

Top 10 States with Solar Tax Incentives

Build Your Credit Card Rewards Points Faster with These Cards

5 Wise Money Moves to Make in 2023

5 Ways an FHA Loan Makes It Easier to Buy a Home

Capital One Venture X Rewards Credit Card Review

Mortgage Rates

Check Now

Insurance

Home Insurance
Auto Insurance
Life Insurance
Insurance Articles
Home Insurance Quotes
Auto Insurance Quotes
Life Insurance Quotes

Top Travel Rewards Cards

Check Now

Credit Cards

Credit Card Rewards
Credit Card Fees
Travel Credit Cards
Cash Back Credit Cards
Top Credit Cards Today
Credit Card Articles

Footer

About Us

About Us
Contact Us
Ad Disclosures

Follow Us

Join Our Weekly Newsletter

Name(Required)
State(Required)
Consent
I agree to be contacted by WiseMoneyLife.com via email and agree to the Privacy Policy.
This field is for validation purposes and should be left unchanged.

Copyright © 2023 WiseMoneyLife.com

Privacy Policy and Terms of Use | Privacy Policy Notice - California | Ad Disclosures | Opt-out of Email


Important Disclosures: This site contains affiliate and partner links and may receive compensation for referrals or purchases made through our links. Contents of this website are copyrighted property of the owner of this site. All other trademarks, logos, and service marks (collectively the "Trademarks") displayed are registered and/or unregistered Trademarks of their respective owners.


Additional Disclosures: WiseMoneyLife.com has partnered with CardRatings for our coverage of credit card products. WiseMoneyLife.com and CardRatings may receive a commission from card issuers.