April 17, 2023
Written By: Melissa Koehler
If you have been thinking about ways to reduce your carbon footprint, now may be the perfect time to make the switch to a clean vehicle. In addition to being kind to the earth by reducing your emissions and reliance on fossil fuels, clean vehicles (which includes both plug-in electric vehicles (EV) or fuel cell vehicles (FCV)) are kind to your wallet by saving you money on fuel costs, and with improved fuel efficiency.
Exponential growth in the industry means you have more choices than ever when going green. These days, almost every manufacturer is likely to have a clean vehicle option for you to consider, and the range of price points combined with new incentives from the government means that switching has never been more financially beneficial. Read on to learn about the incentives available when purchasing a clean vehicle.
Buying New
Under the Inflation Reduction Act, consumers who purchase a new clean vehicle in 2023 may qualify for a tax credit of up to $7,500. To be eligible for this credit, you must purchase the vehicle for your personal use, primarily in the United States. Additionally, your income must not exceed the following guidelines:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
The manufacturer’s suggested retail price cannot exceed $80,000 for vans, SUVs, and pickup trucks, or $55,000 for any other vehicles. A complete list of qualified vehicles and manufacturers can be found here.
Buying Used
If you prefer pre-owned vehicles, you won’t be left behind! Individuals who purchase a used clean vehicle from a licensed dealer may be eligible for a credit of up to 30% of the sale price (with a cap of $4,000). To be eligible the purchaser must not have been the original owner, cannot be claimed as a dependent on another person’s tax return, and cannot have claimed a credit for a used clean vehicle within the last three years. Finally, to qualify, your income cannot exceed the following thresholds:
- $150,000 for married filing jointly or a surviving spouse
- $112,500 for heads of households
- $75,000 for all other filers
To claim this credit, the vehicle’s sale price must be less than $25,000, and the model must be at least two years old. A complete list of qualified manufacturers and models can be found here.
Conclusion
As you can see, it pays to go green, and making the switch is more convenient than ever. Whether you buy new or used, you will enjoy a tax benefit while you save money at the pump. For more information about available credits and qualifying vehicle purchases, please reach out to your advisors at KEB. We are happy to help you make the best choice for you!
Sources:
- https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after
- https://www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-purchased-in-2023-or-after
- https://www.irs.gov/credits-deductions/used-clean-vehicle-credit
- https://www.irs.gov/credits-deductions/manufacturers-and-models-of-qualified-used-clean-vehicles
