June 12, 2024
Maximize Savings When Buying a Used EV

Maximize Savings When Buying a Used EV

There are plenty of ways for drivers to save, from the used EV tax credit to a car donations tax deduction.
Buying an electric vehicle can be expensive, but the federal government has reduced the financial burden of going green on US taxpayers in several ways. This article will introduce the most popular measures for saving money during tax season, from the EV tax credit to car donations tax deduction options.

Take Advantage of the Used EV Tax Credit

At first, the US government only offered tax credits to people buying new EVs. They still get extra help with tax credits of up to $7,500. However, used electric car buyers can now qualify for up to $4,000 in tax breaks.

There’s more to the recent EV tax changes that will sweeten the deal. As of 2024, taxpayers can choose between claiming nonrefundable credits on their returns or transferring the credits to dealers, who can then lower the price of the car accordingly.
As with the previous iteration of the EV tax credit, this option is only available to certain taxpayers. The used EVs must meet IRS specifications regarding pricing and manufacturing guidelines, and only consumers who fall under the income threshold are eligible.

Additional Limitations on EV Tax Credits

Eligible EV buyers can only claim the federal tax credit if all of the IRS’s conditions are met. The credit is only available to individuals who purchase vehicles for personal use and are not being claimed as dependents on other people’s tax returns.
Additionally, taxpayers must not have claimed a clean vehicle tax credit for three years prior to the purchase date.

The EVs must also meet specific requirements. They can be no more than two model years old and must have sales prices of $25k or less. The car must also have a GVW of 14,000 lbs or less.

Eligible EVs must have battery capacities of at least 7 kWh, and buyers must purchase them from certified dealers. Finally, used EVs only qualify for the tax credit once, with one exception. An eligible vehicle transferred to a qualified buyer before August 16, 2022, can still be claimed by a third person in 2024.

Taxpayers at Any Income Level Can Take a Car Donations Tax Deduction

Taxpayers over the current income thresholds of $75k for individuals or $150k for joint returns won’t be eligible for the new or used EV tax credits. That doesn’t mean there’s no way for them to save money at tax time.

There aren’t any income limitations for taking a car donations tax deduction. What that means is instead of trading in their old vehicles, EV buyers can give them to qualifying charities to get a tax break.

The exact amount of a car donations tax deduction will vary based on the value of the vehicle and what the charity does with it. If the charity keeps the car for its use, the person donating it can deduct the car’s fair market value. If it sells the vehicle, taxpayer deductions are capped at the sales price.

 

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