EV TAX CREDITS - THE DEFINITIVE GUIDE TO TAX CREDITS AND LIABILITY (Not Financial Advice)
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- After Tesla's recent update on EV Tax Credits, which now allows for the full $7,500 to be realized on all trims of the Tesla Model 3 and the Tesla Model Y, there are more customers that can get into an EV with less investment thanks to these EV Tax Credits that are a part of the Inflation Reduction Act of 2022.
In the summer of 2022, Congress passed into law the Inflation Reduction Act of 2022. In this bill included an update to the long standing tax credits that have been available to EV customers for some time. The problem is that with restrictions in place, companies like Tesla and GM ran out of available tax credits rather quickly. Both GM and Tesla offer some of the more popular electric vehicles on the market, including the Chevy Bolt, Tesla Model Y and Tesla Model 3. Top that with the upcoming electric Chevy models of the Silverado, Equinox and Blazer, there is a real competitive disadvantage to both Tesla and GM.
More so is the disadvantage that consumers have when considering electric cars. The most popular electric car in the world, the Tesla Model Y, did not have any EV Tax Credits available, and some in congress argued that the credits needed an overhaul to advance priorities in electrification. With these changes, new credits were made available but only to cars assembled in North America.
With some other restrictions around battery components and critical minerals, all vehicles that qualified for these new rules would get half or the full amount at $7,500. The only thing that would prevent a qualified model from getting the full credits available was the consumer. There are income restrictions in place, and because this is a non-refundable tax credit, you must have enough tax liability to realize the full value of the credit available for the car you are purchasing.
Over the last several months, I have been trying to educate people on the difference between a tax refund and tax liability. I still see comments that say people dont think they would get the credit because they only received $1k refund last year. A tax refund is NOT the same thing as tax liability.
In this video, I will present all the details, and make tax liability as clear as possible without getting too technical. In. addition, there are changes to the EV tax credits that continue to be misrepresented. I am going to show you in the bill where the most common misconceptions about the new tax credits are.
After watching you should feel confident in knowing how much of these new tax credits you will or will not qualify for. Also, you should have a much better understanding of how these credits turn into a point of sale in 2024, which does NOT mean it becomes fully refundable.
*NOT FINANCIAL ADVICE*
Vehicles that qualify: www.fueleconomy.gov/feg/tax20...
Qualifications: www.irs.gov/credits-deduction...
IRA of 2022: www.congress.gov/bill/117th-c...
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**I AM NOT A FINANCIAL ADVISOR AND THIS VIDEO DOES NOT REPRESENT FINANCIAL ADVICE**
Good information. Also please add the income limit. If your adjusted gross income (AGI) should be $150k for filing as single and $300k filing jointly
Hi! If I am paying quarterly estimate tax, can I reduce my payments to include ev tax credit? Or should I wait until April to file return?
This is the best video in this regard that I have even watched. Other TH-camrs has confused me when they explained. Your video is clear and deserves a thumps up!!!! Thank you.
When we asked our tax guy about buying an EV he replied, “Do it.” Since we pay him by the minute, we appreciated his brevity, but wondered how it all worked. You gave us very good information without (me) experiencing any evidence of my eyes glazing-over! Thank you-
Very pleased to hear. Thank you.
Thank you! I always thought I had to owe $7500 to take advantage of the credit. Usually get a decent refund, so adjusted my W4 to have les tax taken out 😅. I checked my 1040 line 24 and easily have enough tax liability for several EVs 😂. Which is good because my spouse wants an EV now too 😮
So glad I could help!
Thank you! Best explanation ever given to help me and others understand this Federal Tax Credit for EV's.
Thank you so much for this video! It helped explain a lot of confusion I had on how it works this year and how it would work next year. I appreciate this!🙌🏼
You are so welcome!
Thank you for the detailed explanation. I was about to adjust my tax withholding but since my tax liability was close to your first example then I believe I am all set. Just ordered model Y and can't wait to reap its benefits! 💰💥
Congrats!
You will not get a refund. If you don’t owe any taxes you get nothing
Thank You so much for explaining this in simple to follow examples. This helps clear up my confusion on how this credit works.
Most welcome
Thank you for the very detailed and informational breakdown and scenarios of how the EV tax credit works.
You bet!
I lolled at the 420 capital gains and 69 other income. Nice.
On a more serious note. This is the ONLY video that clearly explained what my tax liability is and how EV credits can be applied to me. Thank you and subbed.
EXCELLENT VIDEO 👏👏👏
The clarification around multiple tax credits helped affirm my own understanding.
Glad it was helpful!
This is awesome. I’ve scoured the depths of the internet looking for this exact video. Well done in some of your very specific numbers too. Don’t think that went unnoticed 😂 Thanks again
Always happy to help, Easter eggs and all!
Wow, such a great explanation! Thank you!
Thank you so much ! I was about to stop withholding thinking I needed to owe at the end. Really helped me.
Welcome!
Thank you. I've been waiting all year for somebody to explain this in a way that I could understand it. Kept hearing all different kinds of things about how this works from other people.
Glad it helped!
Thank you so much for making this video and complex tax topic easy. I know you make videos about everything Tesla as an automobile & tech but touching on this important topic was so kind act from you :). Thanks again.
Glad it was helpful!
I did a lot of research on this and you are one of the best easy to understand explanation, compared to the CPA folks in TH-cam.
Thanks!
I don't usually leave a comment on TH-cam but I got all my questions answered from your video!! thanks a lot for explaining it with such great detail!!
So glad to hear it was helpful!
Awesome Video!!! I wasn't reading it this way but this makes sense!!! Great Job!!!
Glad it was helpful!
Thank you for this clear explanation. It was really understandable with the examples that you gave us.
Glad it was helpful!
Thank you for this resource! Great public service you provide.
Any time!
Literally the best video and explanation available. Thank you
Glad you think so!
Thank you for doing this. SO MANY don’t understand what liability is
Cheers
Very helpful video. Thank you so much 👍
Glad it was helpful!
Thank you very much for putting this video out. It saves me a big headache 😅
You're welcome!
Very eye opening. In the end, this EV tax credit is for people who are already doing well financially because you gotta earn enough income to have a tax liability equivalent to $7,500 in a fiscal year.
Finally a very clear explanation with examples. I was scouring this site to find one confirming this was how it worked.
Cheers
Thank you for the great explanation! Very good and informative video!
Glad it was helpful!
Glad I watched. I didn’t realize you can use the credit for a new car more than once every three years. Thank you!
Happy to help!
Thank you, bearded Tesla guy, for this valuable info. Your channel is the best and is my favorite!
Wow, thanks!
Thank you so much for the clarification. Paying the balance yearly is so agonizing that I totally forgot about the actual entire tax amount. Also thanks for the 2024 heads up particularly on point of sale credit to an eligible entity, worth exploring should a second EV opportunity happen.
Cheers
Thanks to your video I was able to get my tax credit this year!
Glad I could help!
I kind of figured this was how it went but was not sure. Thanks
Thank you so much for clarifying next years $7500 point of sale discount. I thought I would wait till next year to have it deducted right off the price of the car, even though I don’t have that much in tax liability. It works out the same as this years rules. Whatever you owe is offset by UP TO the 7500, whether it’s at time of purchase or when taxes are filed. Thanks for being so informative.
Cheers
Thanks! This was really helpful. I wasn’t sure if there was a limit of the number of EV cars you can buy in one year that would qualify for a tax credit you cleared it for me that it just depends on my total tax liability amount.
Glad it helped!
Thank you. You earned a thumbs up and a subscriber. After speaking with my accountant , what he told me matches 100% with your explanation. Some of the comments (on Reddit) regarding this topic are pretty crazy. Never trust, always verify.
yep! There is so much misinformation out there and because people dont actually know, they perpetuate absolute garbage as fact. I can't tell anyone exactly what their liability is going to be in 2024, but I can show you a good reference to use to get a good idea on what your liability may be. IT IS NOT YOUR REFUND!!!!
reddit is becoming a terrible source for information. another blogging source. good job doing real research
Best video out there by far. Thank you!
Glad it was helpful!
Very helpful, I am 100% clear now :)
Great video answered a lot of questions.
Thank You
Thanks so much for making this video! Glad to know that if I want to buy an EV I get all that tax credit back. About damn time, gettin tired of paying Uncle Sam! Make more videos🎉
Cheers
Best explanation for tax liability. ❤
Glad it was helpful!
Explained very well. Thank you.
Glad it was helpful!
Best EV tax credit video out there...SAVED! The struggle is real to explain it well and correctly and you nailed it!
Posting this to my Tesla groups I watch and moderate! Keep up the good work.....
really appreciate you and thanks a bunch for the Super Thanks!!
This was the perfect video! Thank you!!!❤
Most welcome
What a fantastic video. Thank you!
Glad it was helpful!
Exactly the video I was looking for. Thank you.
Glad it was helpful!
Good video sir. For everyone else, if you're like me and experienced at taxes and adulting - and you're impatient - @11:20 is what you want to see
Cheers!
Thank you 🙏
Perfect explanation. Thank you!
You're welcome!
This was an amazing breakdown, keep up the awesome content!
Appreciate it!
The video I really needed, thank man
The Most educational video on the subject.
Most people don’t have any idea how much they pay for taxes. We should be required to write a check every month to remind everyone. more people will demand more accountability from their government on how their tax dollars are spent.
for sure.
Nicely detail and straightforward
Cheers
As always, thank you for your useful information!
My pleasure!
Thank you!
This is such important information!!!! Many people do not understand how this works.
Cheers
Very informative to straighten this out for people. Nice video
Cheers
Thanks for explaining! This is so confusing topic.
Glad it was helpful!
Excellent explanation, thanks
Glad it was helpful!
fantastic explanation
You are a God sent I subbed thank you man I love you
Glad I could help
Thanks!
Welcome
This was amazing, finally someone explains it!
Welcome!
Thank you! 🙏
You're so welcome!
Thank you for very useful information always. I have one question. If i buy two EVs in the same year and i meet every qualification, then do I get $15,000 credit? Assuming i have more than $15k tax liabilities. I just want to know whether EV credits are limited to one per year or not. Thanks.
THIS IS THE VIDEO I NEEDED!! THANK YOU
Most welcome!
Good job BTG! I do have an idea that may help many people with taxable IRA's. Withdrawing $$ from it is a taxable event. If you are old enough to take $ out, but you don't want to mess with your retirement, transfer the amount needed to generate $7500 taxliability to a ROTH! It will grow without any future Federal tax liability! Here in Florida, there are lots of folks who can do this. You can calculate exactly the amount you need to transfer. Sound interesting?
Smart
This was exactly what I was looking for. I'm in exact same situation, W2 employee with withholding. My total tax is much greater than $7500 and every year I usually get small refund. I had thought because ev tax credit is "non-refundable" tax credit I had thought it means it won't increase my refund. So it appears I was wrong to think that. Feel like I see so many different interpretation on this.
Wow thank you for this information super helpful. Do you know by any chance if the Solar Federal Tax Credit works the same way?
I believe so, but I have not dug into that at this level of detail yet.
Sorry, I might missed some info. How many years do we have to file the tax credit? I don't remember if I ever applied my Tesla in my filing the year I bought my vehicle. Thanks
Hi, great explanation 👍🏻
Do you know if my GF and me get a co loan to buy an EV, can either of us file for the credit? We file separately as single.
Hello my handsome friend. Awesome videos. Keep up the great work!
I have a question, are there tax breaks on buying a used EV for state and federal??
Federal tax credit for used is up to $4k but the income limits are down to 75k single, 150k joint filers. Car has to be 2 years old or older, under $25k price.
Really good explanation 👍👍👍
Glad it was helpful!
Thanks this just confirmed my understanding of the credit. I am hopeful you have a follow up to discuss the income limits and how they work. I am particularly interested in a joint purchase in a case where 1 person may be over the max income and 1 may not.
Check out my previous video on the topic. I cover income in almost all of them
Amazing video!!!
Appreciate you Goon!
thank you!
You're welcome!
So if I bought a ford lightning this month and didn’t use the credit in the deal, I won’t be able to file for the credit?
What a great video. Helps a lot. In 2024 do you think it will be the same benefits regarding the 7500 credit?
the tax credit will not reduce for 10 years unless it is rewritten and passed as an amendment to this law.
Very well done.
Glad you liked it!
Thanks for the info BTG, easy to understand once you watch the video, the only question i have, and I hope you know this, child tax deduction is refundable up to $1500, on your 2nd scenario, could you use the vehicle tax credit and take the $3000 refundable, or is it automatic that child credit goes first?
Child tax credit goes first.
What does the law say about “Self-employment tax” that shows up on line 23 of a 1040? Do you know if self-employment tax can help to offset the EV tax credit?
Very good information. Have you looked into tax credits for small businesses and how that works? Again, thank you very good information.
Have not but I appreciate it
5:04 you answered my question!! My tax liability is 27k after all deduction. We file jointly and don’t make over 300k … I took delivery MYP 2 wks ago and now planning to order M3… total of 15k tax refund from my liability. Thank you!😃
Most welcome, congrats!
Congrats! We did the same. I feel like I got the M3 (inventory) for a friggen steal compared to insane prices last year!
Is $25000 before taxes or after taxes and fees? Thank you
I wanted to bring the situation with the annual income. Our last year -2022 was less than 300, but this 2023 most probably will be over. On the IRS website, I found for the ev tax you could claim whatever year was less out of the two last years. So looks like if 2023 is over $300k you are still good to go.
Yes, but speak with tax professional to be 100% sure.
Excellent video, clearly explained. Thank you so much. I have a question, for married filing jointly, should the vehicle be purchased on the name of both me and my spouse?
In the way I understand the final bill, it wouldn't matter.
Does the tax credit apply to Tesla leases ? Also I read a comment from someone on this site saying that they aren’t rich enough to be able to get the tax credit ! What’s with that ? So if someone makes to little of an income from ssi or something else they don’t get the tax credit ? Please explain
Thank you for explaining this in detail with example. Very helpful! Basically, look at line 24 to see if you qualify. In this case, I don't have any tax liability so I won't be qualify😂
Glad it was helpful!
question: if my line 24 on my 2022 Form 1040 shows $8500. Do I still qualify for the $7500 tax credit if I buy a new EV this year? Thank you!
@tonydizon7286 according to his explanation, you will qualify for the whole 7,500 because your liability is greater than 7,500. That 7,500 will be added to your tax refund.
I wonder given Colorado offers an additional tax credit up to I think $4500-$5000 could be applied in 2024 to the entity as well
Wouldn't it be best to wait till 2024 to purchase so the 7500 comes off the purchase price and therefor lowering your monthly payment and overall interest paid if taking a loan on the car?
I don’t know how I ran across your video but I am glad I did. I want to buy a Tesla and trying to figure out how I could get the entire 7500. I am in California so I am trying to figure the credits out here.
lots of other credits available to you out there!
Thanks for the amazing video! 👍
Just to be clear, how "Point of Sale credit (discount?) starting 2024" is going work is still not very clear?
Also, is it possible that certain automakers would increase MSRP considering Point of Sale credit?
Guidance has not been provided on how consumers will "select" the amount of the credit to apply to the sale.
yea, my assumption is the fords, chevy's of the world will increase the price of the cars, knowing many will take the credit at the time of purchase for during the year. I hope tesla doesn't play that game! I can see other dealers like ford and chevy advertising a price and then if you plan to take the credit at the time of purchase, the price will go up! Like the old days when they did cash for clunkers, if you were using cash for clunkers you didn't get the good deal on the car they were selling.
Cannot like this video enough, thank you!!
You're so welcome!
Love this!!!
Cheers
You're a legend!
cheers
Thank you for the detailed explanation. One question is on the 2024 sale credit to an eligible EV. is this credit calculated based on 2023 adjusted gross. What happens if by end of 2024 the adjusted gross income crosses more than the limits set by IRS. Will the credit amount need to be paid back.
It says the current or previous year AGI can be used
I made around 80k this year before taxes. Would I qualify for the full 7,500 tax credit filing single?
Does anyone know if there is an online calculator to seee what my line 24 would be? Basically I got my first full time job this year so my previous tax statements are not reliable tor estimating my "total tax" for the year.
This was good !
cheers