Figuring out whether you qualify for an electric vehicle tax credit isn’t easy–make, model, pricing, the state where you live, your income, and the list goes on. But once you sort things out, you can save thousands–even on a Tesla.
Real-Time Savings at the Dealer
Gone are the days of waiting until you file your taxes to receive your electric vehicle (EV) tax credit. Thanks to the IRS clarifying rules for “transferring” the EV purchase tax credit from buyers to dealers, you can now enjoy the savings in real time, right at the dealer.
Here’s how it works: Let’s say in 2024, you qualify for the $7,500 federal tax credit on a Tesla (TSLA). Instead of receiving this amount as a refund on your 2024 taxes, you will get an instant discount of $7,500 off the purchase price. It’s important to note that it will be the dealer, not you as the buyer, who must collect the credit.
Qualifying for the Credit
While the credit offers significant savings, it is not a given. Buyers must meet certain criteria to qualify. Currently, these stipulations include having a household income of no more than $300,000 a year and purchasing a car that falls under the credit’s pricing and country of origin limitations. It’s worth noting that these qualifications are subject to change over time.
The Six-Figure EV Dilemma
Leasing an EV can be just as advantageous as buying one. While some argue that buying is more cost-effective in the long run, especially if you plan to keep the vehicle for many years, others highlight the growing maintenance costs of aging cars. Ultimately, choosing between buying and leasing depends on your individual circumstances and preferences.
In conclusion, understanding whether you qualify for an electric vehicle tax credit can be complex, but the potential savings are worth the effort. With the recent IRS clarification allowing for real-time savings at the dealer, you can now enjoy immediate discounts on your EV purchase. Make sure to stay updated on the qualification criteria as they may change over time. And for those eyeing high-end EVs, leasing can be a viable option to still benefit from the tax credit.
The Benefits of Leasing a Car
Leasing a car comes with several advantages, particularly when it comes to lower monthly payments. This is because the leasing company owns the car and can sell it at the end of the lease to realize its value.
Tax Credits and State-Level Benefits
In addition to the federal tax credit of $7,500, there are numerous state-level benefits available. For example, buyers in California may qualify for an additional $7,500 off. In total, the potential savings amount to $15,000 – with $7,500 from the federal government and $7,500 from the state.
A Real-Life Example
To illustrate these benefits, let’s consider a base-level Model 3 priced at around $39,000. In California, a buyer who qualifies for both the state and federal incentives could pay as little as $24,000 (before tax title and destination fee). Moreover, California offers an extra perk – a $2,000 EV charging card – which provides qualified buyers with $2,000 worth of free charging at public EV chargers. As a result, the price of a Model 3 could be further reduced to $22,000.
Savings Across States
It’s important to note that significant savings aren’t limited to the West Coast. Connecticut, for instance, offers a $2,250 discount on new Tesla and other EV models. This discount operates similarly to the federal tax credit.
Conclusion
Although it’s crucial to keep in mind that state credits and federal eligibility can change over time, buyers can educate themselves by conducting thorough research and consulting their dealers.
