Federal tax credits on EVs are impacting consumer behavior and sales. We dive into the details, trends, and future market predictions here.
Consumers spend 35% more at the gas pump this year than last. The rise in gas prices has many people looking at alternative options, such as electric vehicles.
High gas prices and EV sales have a direct correlation these days. Consumers benefit from federal tax credits on EVs, but many don’t understand what they are. Not knowing the tax credits available could lose you a lot of money.
Before you buy an electric vehicle, read this article to learn about the tax credits available.
What Are Federal Tax Credits on EVs?
Electric cars are becoming more popular as their prices drop and their performance increases. These cars can be used to reduce emissions and decrease the country’s dependence on fossil fuels.
The government is also incentivizing people to buy electric cars by offering a tax credit. Buyers may qualify for this credit if they meet the criteria.
It’s important to note that the credit is not refundable and does not roll over. This means that if the credit is higher than the tax you owe, you only get the amount equal to your tax liability. This tax credit is only available to the registered owner of the electric vehicle.
How Much Is the EV Federal Tax Credit?
The federal government offers a $7,500 tax credit for buyers of new qualified plug-in electric vehicles. The vehicle must have been purchased after 2010 to qualify. This incentive is available to both consumers and businesses.
The incentive is also available for hybrid vehicles that have at least four wheels and a gross vehicle weight rating of fewer than 14,000 pounds.
Types of Electric Vehicles Eligible
There are many makes and models eligible for the federal tax credit. They include:
- Land Rover
- And more!
This list from the Department of Energy contains all eligible vehicles.
Other Credits Available
For individuals who bought an EV from a manufacturer that was capped out or have an older vehicle, there are other options. Some states have tax incentives. For example, in California, there are rebates and grants available on top of the federal tax credit.
To learn more about possible incentives in your state, check out this resource from the Department of Energy.
The Impact of Gas Prices and Consumer Behavior
The high gas prices have had an impact on consumer behavior. Many people have been considering driving less, or not at all, to save money. People are also looking for ways to cut down on their energy usage.
Read more about the top three ways gas prices have impacted America below:
Car Rental Companies Are Taking Advantage of EVs
A company that has a fleet of electric cars can save a ton of money on fuel costs and maintenance. This allows them to be more competitive in the market. With the federal tax credits available to both individuals and businesses, it makes sense for rental companies to invest in EVs.
Electric vehicles will be more profitable in the long run. Having a fleet of them may also attract climate-conscious customers that they may not have before. Car rental companies have a big carbon footprint and EVs can help to greatly reduce it.
When gas prices are high, people have less disposable income and less discretionary spending power. With less money to spend on travel, people might opt for alternative options such as staying at home or visiting friends and family over traveling.
A lot of people feel uncertain about the state of the world and the economy. This makes them want to save money where possible and see what happens in the future.
Lower Consumer Confidence
Consumers feel less confident about spending when gas prices are high. They aren’t sure what the future holds and are pessimistic about things getting better. This is partly why more and more people are looking to invest in EVs.
When gas prices rise, people realize how much the world relies on fuel to do anything. People depend on fuel to travel and get the goods needed to survive.
When consumers are less confident, they look at alternative options. This includes buying a cheaper type of gas instead of a premium.
Future EV Trends
The Biden administration is attempting to pass a bill that would extend the electric vehicle tax credit. There are also federal plans to expand EV charging infrastructure and establish EVs in government fleets.
The Build Back Better Act includes legislation to increase the tax credit to $12,500 for American-made electric vehicles. It also outlines plans to build climate change technology in the US with US-made materials.
There are also potential bills on the table to eliminate the 200,000 sales limit and tax credits for used EVs.
August 2022 Updates to the EV Tax Credit
When manufacturers reach 200,000 sales the tax credit phases out. Starting in 2023, this cap on sales will be dropped. This means manufacturers have unlimited sales potential!
The credit also depends on how much income tax you owe and the size of the vehicle’s battery. Taxpayers who make less than $150K a year can use this.
A recent bill passed extending the federal tax credit for EVs until 2032. Starting then, the credit can be applied at the time of sale instead of waiting for your tax return.
Tips for Buying an EV
The future of the electric vehicle is not just about reducing emissions and helping the environment, but also about saving money. With an increasing number of electric vehicles on the road, you can save a lot of money by switching to an electric car. However, there are some things you should consider before buying one.
- Consider cost savings and fuel efficiency
- Research what type of charging stations are available
- Make sure you have enough space for charging stations
- Be prepared for long-term ownership
- Understand the battery life
Going green has never been easier than it is in 2022! Make sure you do research and get an electric vehicle that will meet your needs.
Learn More About EVs in California
Now you have a better understanding of the federal tax credits on EVs. We hope you have everything you need to make a sound decision about your next vehicle. Be sure you ask your accountant or tax preparer if you are eligible for federal tax credits next tax season!
Do you want to learn more about electric vehicles? Read this article about the impact of EVs and emission-free goals in California.
Legacy Car Rental in Los Angeles and its editorial team hopes you enjoyed this article and wishes you a pleasant experience, next time booking an electric vehicle from its rental fleet.