DRIVERS now only have weeks left to get credit when buying or leasing a new car with sweeping legislation coming into effect.
Almost $10,000 worth of tax credits for drivers looking to get hold of an electric vehicle will soon be unavailable.
Drivers are running out of time to get money back when they purchase or lease an EV[/caption]
What is the clean vehicle tax credit?
Drivers are set to lose out on $7,500 in tax credits and $4,000 in used EV credit on September 30.
Congress first approved the tax breaks for EV drivers in 2008, it was expanded in 2022 to cover leased vehicles.
A manufacturer cap of 200,000 vehicles was also implemented in the 2022 legislation change.
Now legislation approved by Congress on Thursday will see drivers lose their EV tax credits when buying or leasing a new car.
Still time to cash in
With Labour Day just around the corner the opportunity for car makers to roll out exciting promotions on new models is fast approaching.
Drivers will find the best deals on electric motors this year with motorists scrambling to lease an EV before the tax credits expire on September 30.
EV tax credit savings
The tax credit can save EV leaseholders an average of $208 a month spread across a 36-month lease.
According to the U.S. Department of Energy, drivers of fully electric vehicles can save up to $2,200 per year on fuel.
The IRS is reportedly allowing consumers more wiggle room to claim the EV tax credit before it ends.
Eligibility for the credit was originally tied to a vehicle’s delivery date.
However, this month the IRS issued a notice clarifying that consumers are eligible for credit if they sign a contract for a vehicle before September 30 and make a payment.
This can include putting money down or trading in a car and applies even if the vehicle isn’t delivered until after the deadline.
How to qualify for the credits
It comes as President Trump’s One Big Beautiful Bill was recently signed into law and includes a clause that ends current federal clean-vehicle tax credits.
Anyone looking to capitalise on the tax credits before they are cut will need to confirm their income qualifies.
Motorists could claim up to $7,500 in credit[/caption]
The purchase credit disappears once modified adjusted gross income tops $300,000 for joint filers, $225,000 for heads of household or $150,000 for single filers.
Only plug in vehicles count so mild hybrids will not be able to qualify for the tax credit.
Anyone hoping to get a tax cut will need to pick a vehicle from the approved list.
Final assembly of the motor must occur in North America for the vehicle to be eligible.
On top of this the sticker price must not exceed $80,000 for trucks, vans, and SUVs, or $55,000 for cars.
If the car meets guidelines for both battery components and critical minerals, the credit is worth $7,500 however if it only meets guidelines for one of the two, the credit will be $3,750.
What is the clean vehicle tax credit?
This initiative provides new opportunities for consumers to save money on clean vehicles, offering multiple incentives for the purchase or lease of electric vehicles.
The clean vehicle tax program is a federally funded program through the US Department of Energy. Drivers who qualify could earn credit of up to $7,500 if they buy a new, qualified plug-in EV or fuel cell electric vehicle.
The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.
The dealer should give you a paper copy of a “time of sale” report when you complete your purchase. Keep this copy for your records because it affirms that the dealer sent a report to the IRS on the purchase date.
You must file Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.
Source: IRS
