Electric vehicles are the newest trend in the industry of vehicles. And why shouldn’t they be? They are beneficial, power-efficient, have a lower carbon footprint, and are not that heavy on your pocket when it comes to the monthly expenditure.
Electric cars have a very positive effect on the environment. Governments all around the globe are trying to reduce the carbon footprint of their countries and there have been constant efforts to improve the air quality of cities, especially the ones with heavy traffic.
Vehicles that run on fuel can add so much to the poor air quality of a city and the higher carbon footprint of a country. That is why the government is giving off benefits to the people who are investing in electric cars.
The electric vehicle tax credit is one of those benefits. If you are selling electric vehicles in the US, you will be entitled to a state incentive of $2500 - $7500 through the state’s clean vehicle rebate program in California, effective January 1st, 2020.
In the rest of the US, the current maximum tax credit is $7500 with no maximum price and currently phases out for individual automakers once they hit 200,000 electric vehicles sold. Another bill is on its way that would limit tax credits to vehicles with a retail price below $80,000 to qualify for the tax credit.
To claim this tax credit, you can use Form 8936 to figure your credit claim for your plug-in electric drive motor vehicle. The following requirements must be met to qualify for the credit.
- You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee is entitled to the credit.
- You placed the vehicle in service during your tax year.
- The vehicle is manufactured primarily for use on public streets, roads, and highways.
- The original use of the vehicle began with you.
- You acquired the vehicle for use or to lease to others, and not for resale.
- You use the vehicle primarily in the United States.
Some exceptions to these requirements are if you are a seller of a qualified plug-in electric vehicle company for tax exemption, you can only claim the credit when you clearly disclose in writing to the purchaser the amount of the tentative credit allowable for the vehicle.
