How Does the EV Tax Credit Work?

If you’re considering an electric vehicle as your next daily driver in Glendale or Downey, you won’t just have the opportunity to enjoy a cleaner, greener driving experience, but you may also save some money. Thanks to federal and state EV tax credits, you stand to reap some significant savings on the cost of your next qualifying EV. But just how does the EV tax credit work? INFINITI of Downtown LA shares what you need to know about the federal-level and California EV tax credits that are currently available.

Federal EV Tax Credits

Both new and used EVs may qualify for tax credits at the federal level. For new vehicles, these conditions must be met to claim up to $7,500 in EV tax credits:

• The EV has been made by a qualified manufacturer
• The EV costs no more than $80,000 for vans, SUVs, and pickups and no more than $55,000 for all other vehicles
• The EV boasts a battery capacity of at least seven kilowatt hours
• The EV has a gross vehicle weight rating of less than 14,000 pounds
• The EV satisfies critical mineral and battery component requirements
• The EV undergoes final assembly in North America

To be eligible, buyers must not exceed these EV tax credit income limits:

• $300,000 for married couples filing jointly or a surviving spouse
• $225,000 for heads of households
• $150,000 for all other filers

As far as used EVs, you can earn up to $4,000 in tax credits, and the requirements are much less restrictive:

• The EV must be purchased from a dealer
• The EV must cost no more than $25,000
• The EV must be within two years of the current calendar year

EV tax credit income limits are lower when you opt for a used model:

• $150,000 for married filing jointly or a surviving spouse
• $112,500 for heads of households
• $75,000 for all other filers

So, how does the EV tax credit work? It’s simple: In most cases, the credit will be applied directly at the point of sale for instant savings! Alternatively, you can claim it on your tax return by completing IRS Form 8936.

California EV Tax Credits

While there are no California EV tax credits per se, there are a number of rebate and discount programs offered by different state boards and utility companies. One notable discount comes from the California Air Resources Board, which gives you up to $12,000 to retire an eligible internal combustion vehicle and replace it with an eligible EV. Applicants must earn less than three times the federal poverty level.

Another popular program comes from the Los Angeles Department of Water and Power. Customers can enjoy a maximum $1500 rebate when buying an eligible EV. Buyers who use Lifeline or EZ Save Low Income Customer Assistance can get as much as $2500. Also, the LADWP’s Residential EV Charger Rebate Program provides up to $1000 for the purchase and installation of an eligible Level 2 charger and $250 for the installation of an EV-specific meter.

Contact INFINITI of Downtown LA for More About the EV Tax Credit

How does the EV tax credit work? If you have any questions or would like more information about EV tax credits or EV tax credit income limits, don’t hesitate to contact us in Los Angeles. In the meantime, explore our car-buying tips so you can start your shopping experience with confidence. We know we have a fuel-efficient vehicle that will meet all your driving needs in Van Nuys and beyond!