The US has opened up a new door for electric vehicle manufacturers and car dealerships by offering a tax credit on new electric cars. These tax credits were offered by the government with the hopes of providing the consumer with a viable alternative to fossil fuels for use in personal transportation.
There are two forms of tax credit available to electric cars.
A percentage of the cost of the electric car as determined by the manufacturer or retailer or the credit can be claimed as long as the manufacturer agrees to offer you a specific amount of tax credit.
If the credit exceeds what you owe the government then you pay no tax and get a refund from the government. The other form of tax credit offers a rebate based on the fair market value of the electric car.
There are two areas of the market where you can receive this tax credit. These include the customer side and the manufacturer side.
If you purchase an electric car for the sole purpose of selling it for a profit then you are required to report all profits to the Internal Revenue Service. This will allow the IRS to determine the credit you are eligible for. The dealer side is a little different.
A dealer is not required to report your profit to the IRS and they do not have to pay taxes on the sale. However, because of the incentive program they need to report their profit to the IRS on the tax return form.
It is important to understand that these electric car tax credits are subject to certain restrictions.
The first rule is that if the dealer does not make a profit then they cannot claim the tax credit. In addition to that they can not receive more than 25% of the gross profit as tax credits.
Second, electric car dealers must register all electric cars to sell them to the public. Registration is required each year to ensure the dealer complies with the tax requirements.
Other restrictions also apply to the use of tax credits. If the dealer participates in any tax credit related programs, the dealer is not allowed to sell electric cars that are not electric cars.
The manufacturer and electric car dealer options are the most beneficial to the consumer. They give you the choice to buy an electric car or a new hybrid with a tax credit for your use.
Although this option is more costly and can take longer to build, the tax credit is more valuable in the long run. By purchasing a new electric car with a tax credit you are saving money on your own taxes.
If you are considering getting an electric car or hybrid for your family, the tax credit could provide a great option. Try to find out if this tax credit is available in your area.