how does the EV tax credit work, clean energy not sure what exactly its called?

You would need to make that decision based on whether you prefer to pay less at the dealer or get a bigger refund if you qualify for the credit, when you file your return. If you take it at the dealership, you can use it to reduce the upfront purchase price.  If you wait to take it when you file your taxes, you will pay more at the dealer, but then if you qualify, you may get that much more of a refund when you file your return. 

The negative side, is if you take the credit at the dealership and then end up not actually qualifying for the credit, you would have to repay the credit when you file your taxes. 

Things to remember about this credit:

• It is worth UP to $7,500 depending on the vehicle you purchase.      The credit varies per vehicle
• It is a nonrefundable credit.  This means it will reduce your tax liability by up to $7,500 but will not result in a negative number or a tax refund of money you did not pay in or have withheld.
• The credit cannot be carried forward
• You can use your income for the year you take delivery or the prior year if your income in the previous year was below the threshold if it is above the threshold in the current year. 
• In order to qualify your AGI must be less than:
  • $300,000 if Married Filing Joint
  • $225,000 if Head of Household
  • $150,000 if single or Married Filing Separate
• Vehicle Qualifications are as follows:
  • Vans, SUVS, and Pickup Trucks my have an MSRP of no more than $80,000
  • Other vehicles must have an MSRP of no more than $55,000
    • The MSRP does not include destination charges, options added by the deal (seal coating, extended warranty, etc.) taxes, fees, or manufacturer discounts or incentives. Basically, it does not matter if you strike a good deal on the vehicle if the Manufacturer says it is worth more than the limit, it does not qualify.

Final Assembly must be in North America

 "In accordance with proposed IRS regulations, beginning January 1, 2024, buyers can reduce the clean vehicle’s upfront purchase price by the amount of their Clean Vehicle Credit by choosing to transfer their credit to the dealer. Before 2024, eligible clean vehicle buyers could only receive the amount of their credit after filing their tax return." Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit

Transfer of new clean vehicle credit.

For vehicles placed in service after 2023, you may be able to transfer the credit amount to the dealer at the time of sale and receive an immediate financial benefit in place of a tax credit claimed on your tax return. You will need to file Form 8936 with your return for the tax year in which the vehicle was placed in service. For details, go to IRS.gov/CleanVehicles.

Transfer of previously owned clean vehicle credit.

For vehicles acquired and placed in service after 2023, you may be able to transfer the credit amount to the dealer at the time of sale and receive an immediate financial benefit in place of a tax credit claimed on your tax return. You will need to file Form 8936 with your return for the tax year in which the vehicle was placed in service. For details, go to IRS.gov/CleanVehicles.

EV Credit-New

EV Credit-Used

Click here to enter your VIN to see if your vehicle qualifies

You would need to make that decision based on whether you prefer to pay less at the dealer or get a bigger refund if you qualify for the credit, when you file your return. If you take it at the dealership, you can use it to reduce the upfront purchase price.  If you wait to take it when you file your taxes, you will pay more at the dealer, but then if you qualify, you may get that much more of a refund when you file your return. 

The negative side, is if you take the credit at the dealership and then end up not actually qualifying for the credit, you would have to repay the credit when you file your taxes. 

Things to remember about this credit:

• It is worth UP to $7,500 depending on the vehicle you purchase.      The credit varies per vehicle
• It is a nonrefundable credit.  This means it will reduce your tax liability by up to $7,500 but will not result in a negative number or a tax refund of money you did not pay in or have withheld.
• The credit cannot be carried forward
• You can use your income for the year you take delivery or the prior year if your income in the previous year was below the threshold if it is above the threshold in the current year. 
• In order to qualify your AGI must be less than:
  • $300,000 if Married Filing Joint
  • $225,000 if Head of Household
  • $150,000 if single or Married Filing Separate
• Vehicle Qualifications are as follows:
  • Vans, SUVS, and Pickup Trucks my have an MSRP of no more than $80,000
  • Other vehicles must have an MSRP of no more than $55,000
    • The MSRP does not include destination charges, options added by the deal (seal coating, extended warranty, etc.) taxes, fees, or manufacturer discounts or incentives. Basically, it does not matter if you strike a good deal on the vehicle if the Manufacturer says it is worth more than the limit, it does not qualify.

Final Assembly must be in North America

 "In accordance with proposed IRS regulations, beginning January 1, 2024, buyers can reduce the clean vehicle’s upfront purchase price by the amount of their Clean Vehicle Credit by choosing to transfer their credit to the dealer. Before 2024, eligible clean vehicle buyers could only receive the amount of their credit after filing their tax return." Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit

Transfer of new clean vehicle credit.

For vehicles placed in service after 2023, you may be able to transfer the credit amount to the dealer at the time of sale and receive an immediate financial benefit in place of a tax credit claimed on your tax return. You will need to file Form 8936 with your return for the tax year in which the vehicle was placed in service. For details, go to IRS.gov/CleanVehicles.

Transfer of previously owned clean vehicle credit.

For vehicles acquired and placed in service after 2023, you may be able to transfer the credit amount to the dealer at the time of sale and receive an immediate financial benefit in place of a tax credit claimed on your tax return. You will need to file Form 8936 with your return for the tax year in which the vehicle was placed in service. For details, go to IRS.gov/CleanVehicles.

EV Credit-New

EV Credit-Used

Click here to enter your VIN to see if your vehicle qualifies