How Does the EV Tax Credit Work?

General Motors, which owns Buick, GMC, Chevrolet, and Cadillac, recently announced an all-new lineup of fully-electric vehicles hitting the streets of Rome and beyond over the next few years. These vehicles include the GMC Hummer EV, the Cadillac LYRIQ, and the Chevy Silverado EV. There are a lot of benefits to buying an electric car, which enjoy near-instantaneous torque, lightning-fast acceleration, a quiet cabin, and zero carbon emissions. But did you know that there are financial advantages to going electric as well? It’s true! Check out the guide below for all the details on the federal EV tax credit, and be sure to keep an eye on our inventory so you’ll know the moment the new models arrive.

Electric Vehicle Tax Credit Eligibility

The federal EV tax credit starts at a minimum of $2,500 and goes all the way up to $7,500. However, there are certain eligibility requirements that the EV must meet in order to qualify for the credit. In addition to being brand-new and manufacturer after December 21, 2009, the electric vehicle must meet these criteria:

• Draws propulsion using a traction battery that has at least 5 kilowatt-hours (kWh) of capacity
• Uses an external source of energy to recharge the battery
• Has a gross vehicle weight rating (GVWR) of up to 14,000 pounds
• Meets specified emission standards 
• Has to be mostly driven in the United States

There are also requirements for battery size and charging power–the EV must be built by a qualified manufacturer, run on a battery pack rated for at least 4 kWh of energy storage, and be charged by an external source. This last requirement excludes traditional hybrid cars, which self-charge their batteries on the road, but allows for plug-in hybrids to take advantage of the tax credit as well as full EVs.

Are You Eligible for the Federal Electric Car Tax Credit?

In addition to meeting the vehicle requirements for the electric vehicle tax credit, you must personally meet a set of financial requirements to qualify for the tax incentive. To start, you must buy the vehicle rather than leasing it, since the tax credit only goes to the owner of the vehicle. Second, the amount you owe on your income tax is what you’ll get from the government as a credit–if you owe at least $7,500, then you’ll get the full $7,500 tax credit. 

However, if you only owe $3,000, then that’s what you’ll get, even if your vehicle is eligible for the full $7,500. Third and finally, you can’t pass on the tax credit if you sell your EV, since the credit must be claimed by the original registered owner. You also can’t claim the credit if you buy a pre-owned EV.

How Long Will the Federal EV Tax Credit Be Available? 

While the federal EV tax credit is a great way to save on your next Acworth ride, it won’t be around forever. The EV tax credit is only available to car manufacturers until they sell their 200,000th eligible EV or plug-in hybrid. After they hit this milestone, they have until the second quarter of the year until the credit expires. Some manufacturers that specialize in EVs and hybrids have already met this milestone–you can find a full list on the IRS website.

Find Your Next EV at Welborn GMC Of Cartersville!

If you’re interested in learning more about the new generation of General Motors electric vehicles, contact our office! You can also stop by our dealership to talk to a member of our team in person–we’re conveniently located near Canton and happy to help. Be sure to check out our model research hub for more information on the vehicles in our current lineup.