Electric Cars and Tax Credits: What You Need to Know Before Making a Purchase

Electric cars have slowly become more popular as the world tries to become more environmentally-friendly. At the same time, the government has been offering tax credits for electric car buyers. If you’re thinking of buying an electric car or are just curious about this new technology, there are a few things that you need to know about electric cars and tax credits before making a purchase.

Summary:

What is an electric car?

First and foremost, let’s discuss what an electric car is. Simply put, an electric car is a vehicle that runs on electric power instead of gasoline. It uses a battery to store energy, which is then used to power an electric motor. This makes it a zero-emission vehicle, and as a result, it is better for the environment.

Electric cars come in all shapes and sizes, from compact hatchbacks to large SUVs. Some examples of popular electric cars include the Tesla Model 3, Nissan Leaf, and Chevrolet Bolt. These cars can range in price from $20,000 to over $100,000, depending on the brand and model.

What are the tax credits for electric cars?

The government has been offering tax credits for electric car buyers since 2010. The amount of the tax credit varies depending on the vehicle and the manufacturer. The tax credit ranges from $2,500 to $7,500 per vehicle, depending on its battery capacity. However, once a manufacturer sells a certain number of electric cars, the tax credit starts to phase out for that manufacturer.

For example, Tesla was the first manufacturer to hit the 200,000-vehicle mark in 2018, which started the phase-out period. For Tesla buyers who purchased a car after January 1, 2019, the tax credit was reduced to $3,750. For those who purchased a car after July 1, 2019, the tax credit was reduced to $1,875. As of January 1, 2020, Tesla buyers no longer receive a tax credit.

Keep in mind that the tax credit is not a rebate. This means that you cannot get money back from the government if you do not owe any taxes.

What are the advantages of electric cars?

There are several advantages to owning an electric car, such as:

• Zero emissions: Electric cars do not produce any emissions, making them better for the environment than gasoline-powered cars.
• Cheaper to operate: Charging an electric car is cheaper than filling up a gasoline-powered car. Plus, electric cars require less maintenance since they have fewer moving parts.
• Quieter: Since electric cars do not have a combustion engine, they are much quieter than gasoline-powered cars.
• Instant torque: Electric cars provide instant torque, meaning that they have instant acceleration and are more responsive.

What are the key takeaways?

Before you purchase an electric car, here are a few key takeaways that you need to keep in mind:

• Electric cars are environmentally-friendly and cheaper to operate than gasoline-powered cars.
• The tax credit for electric cars ranges from $2,500 to $7,500 per vehicle, depending on its battery capacity.
• The tax credit is not a rebate, which means that you cannot get money back from the government if you do not owe any taxes.
• The tax credit starts to phase out once a manufacturer sells a certain number of electric cars.

Overall, electric cars are a great option for those who are environmentally-conscious and want to save money on their car’s operating costs. When purchasing an electric car, make sure to keep the tax credit in mind, as it can help reduce the overall cost of the car.