What are EV tax credits and how do they work?
Under the Inflation Reduction Act (IRA) lawmakers included a tax credit to encourage automotive market players to opt for an electric vehicle (EV). A good luck with reducing emissions expected from the new law are based on the adoption of the The IRA is linked to the increased presence of electric vehicles on the road.
One of the ways that legislators who support the Green New Deal hope to incentivize automakers to produce electric vehicles and create well-paying jobs in the process is by offering a tax credit. This type of measure is not included in the IRA, but companies that build electric vehicle charging stations could claim the credit as long as they “pay prevailing wages and hire registered apprentices, ensuring that local wages are not undermined by low performing contractors.”
For households and families
The IRA includes a tax credit of up to $7,500 for those buying a new EV and $4,000 for a used one. The median price of a new EV is $54,000 according Inside electric vehicles.
Speaking about how the legislation will help young Americans, the White House said these tax credits “could [help them] buy their first car and skip the gas pump forever.
However, $54,000 is a steep price compared to more fuel-efficient sedan options for those who are looking for a new car. Additionally, with the urban population of the United States reaching approximately eighty-three percent, many young people might have preferred the government to invest in public transit systems reduce the number of cars on the road in general, rather than just that
who consume fuel.
Overall, the electric vehicle tax credit should save households about $950 per year. It is unlikely that this low to middle income households earning less than $50,000 because this group represents only about fifteen percent of car owners.
How to claim the credit?
Buyers should also be aware that not all electric vehicles are eligible for the tax credit and those on the market should ensure that the vehicle they have chosen falls under the legislation. Once an eligible vehicle has been purchased, the purchaser will need to obtain a certification letter from the dealership. So, Form 8936 must be submitted to the IRS. As simple as that.