How tax credits for electric vehicles will work in 2024

Buckle up because we're about to embark on a thrilling adventure into the world of 2024 taxes. Yippee! And why is this exciting? Because it's for electric vehicle tax credits and a cleaner, greener future. Okay, now we're talking.

As we enter the new year, the landscape of EV tax credits continues to evolve. Since we’re not tax advisors, you should consult your own tax professional before filing your taxes or following any advice. That said, here’s what we discovered.

Shifting EV tax credits

Until now, people have been able to claim a nonrefundable credit on their tax returns. Starting Jan 1, the IRS will let you transfer the credit to the dealer and lower the price of an EV at the point of sale. The near-instant credits are $7,500 for eligible new EVs and $4,000 for qualifying used EVs.

How to wheel and deal EV tax credits

Step 1. Buy an electric vehicle.

Step 2. The dealership subtracts the tax credit from the price.

Step 3. You're off the hook with the IRS.

These new switcharoos help EV buyers receive the full credit instead of jumping through end-of-year tax loopholes. Another perk is the IRS encourages dealerships to participate by offering them a payday within 72 hours. So, win-win.

Eligible tax credit lookouts

• Electric vehicles or plug-in cars have to be made in North America.
• $80,000 or less for new SUVs, vans, and trucks.
• $55,000 or less for new cars
• $25,000 or less for used vehicles
• Buyers can't have an annual income above $150,000 if single, $300,000 if filing jointly, and $225,000 if head of a household.
• Depending on the vehicle, some battery and component requirements are needed for a tax credit.

While these tax credits offer a financial spark, they'll also jolt to the environment. The more EVs we have on the road, the better we'll counteract all the clunkers sputtering around today. If upgrading to an electric or hybrid vehicle in 2024 has crossed your mind, consider selling your older car to Peddle.