When you’re interested in taking home a new BMW i4 or BMW iX, it’s likely you can take advantage of the federal incentive available with electric vehicles. But, how does the federal tax credit for electric cars work? Depending on an EVs traction battery capacity and gross vehicle weight rating, you’re open to federal tax credits from $2,500 to $7,500. That means on top of the environmental benefits of electric vehicles, you may be able to earn this electric car tax credit when you purchase an eligible vehicle. Learn more about the models that qualify for this credit and let’s take a closer look at how the federal tax credit for electric cars works. If you have any questions, don’t hesitate to contact us at BMW of Tenafly near Fort Lee.
While this is a great deal when you’re interested in adding efficiency to your Cresskill streets, not every EV model is eligible for a federal tax credit. To be able to earn this credit, you’ll have to have purchased a new EV after December 31, 2009, and the electric vehicle needs to meet the following criteria:
Keep in mind that when purchasing a plug-in or fully-electric EV, it needs to be built by qualified manufacturers to be able to earn the maximum electric car tax credit of $7,500. The battery packs also need to be rated for at least 4 kWh of energy storage and be capable of external charging.
Now that you have a better idea of how the federal tax credit for electric cars works, you’re likely asking, “am I eligible?” Know that the electric car tax credit is only available if you buy the vehicle, not leasing. When leasing a vehicle the tax credit goes to the lending institution as they are the ones that own it.
If you’re ready to take home an EV, it’s a good idea to understand how much you may owe in income tax for that year. This amount is essential to understanding how much tax credit you can get for an EV purchase. That means if you owe $3,000 in income tax and buy an electric model that is eligible for the full $7,500, you’ll only earn $3,000 of the credit. For another example, if the model you’re interested in is eligible for $1,500 and your income tax is $3,000, you’ll only earn $1,500 instead. In other words, only shoppers who owe at least $7,500 in income tax can receive the full federal tax credit when buying an EV.
You should also be careful when purchasing pre-owned electric models as the tax credit only applies to the registered owner of the vehicle. You cannot pass on the tax credit to someone else if you decide to sell your EV.
When you’ve got your eye on the new BMW EV for your Closter commutes, you don’t want to wait as the tax credit does stop at a certain point. After the manufacturer has sold200,000 eligible plug-in or EV models, the tax credit will begin to phase out after their second quarter. This means that many of the popular models from Tesla and General Motors (GM) are already ineligible for electric car tax credits based on the number of vehicles sold. Learn more about qualifying manufacturers from the IRS.
If you’re interested in taking advantage of the federal electric car tax credit, learn more about the electric capabilities of the BMW lineup with BMW of Tenafly. Then, when you’re on Tenafly streets with a new EV, be sure to check out charging stations all around town, so you’re ready to keep the adventure going all day long.
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