Because only 1% of Americans own electric cars, the entire country is missing out on the environmental benefits these vehicles can offer. The government has decided to intervene to change this statistic. Their solution is the electric car subsidy (also known as the EV subsidy or electric vehicle government subsidy).
The electric vehicle subsidy offers Americans a few tax benefits as a reward for making the switch from fossil fuels. If you’re considering zero-emissions transportation, here’s what you should know about how much money you could save with the help of the EV car subsidy:
Is There Any Subsidy on Electric Car in USA?
The govt subsidy for electric vehicles takes the form of a tax credit. This tax credit gives consumers up to $7,500 back on their taxes as a subsidy on EV cars. This EV car subsidy program has been around since 2009, but there were some recent changes made in 2022, which we’ll discuss later.
What Is the Subsidy for an Electric Car?
If you bought a new electric vehicle for the first time, you could receive up to $7,500 from the government as an electric car subsidy. If you purchased a used vehicle, the electric vehicle subsidy drops to a max of $4,000.
Electric Car Subsidy 2022
For starters, the electric vehicle subsidy applies to cars or trucks assembled in North America only.
If you’re expecting a subsidy for electric vehicles with foreign components, it’s available. The caveat, however, is that the United States must supply at least 40 percent of the car battery’s essential minerals. This electric car subsidy also applies if 2/5 of a battery’s critical components are made in countries that have free-trade agreements with the United States.
Once those requirements are met, you can receive $3,750 as an electric vehicle subsidy. Only if at least 50% of the vehicle’s battery components are produced in the United States (or nations that have a free trade agreement with that nation) is the remaining $3,750 available.
The government has identified several types of vehicles that qualify for an electric car subsidy. For example, the first 200,000 electric cars sold by an automaker are eligible for a max of $7,500 tax credit. After this number is reached, the electric car subsidy will expire in 1 year for that manufacturer.
On January 1, 2023, this cap on the subsidy for electric vehicles will be removed. As a result, the govt subsidy for electric vehicles will be available to all vehicles produced by certain manufacturers.
For the electric car subsidy 2022 through 2026, over $1.78 billion is expected to be spent on the govt subsidy for electric vehicles.
Does the Government Subsidize Electric Cars?
Yes, there is a government EV subsidy available. The minimum credit amount you can claim as a subsidy on EV cars is $2,500.
The maximum subsidy for electric vehicles is $7,500. However, not all vehicles are eligible for the full subsidy for buying electric cars.
For example, the government won’t subsidy electric vehicles like the 2020 A8L Hybrid for the full amount. Hybrid vehicles like these can only claim a max of $6,712 of the electric car subsidy.
The electric car subsidy is also nonrefundable. If your tax amount is less than the given EV subsidy, you cannot keep the remaining funds for expenses like towing an electric car, for example.
Why Does the Government Subsidize Electric Cars?
The government subsidies for electric cars were a result of the desire to help the environment. Authority figures worry about air pollution and greenhouse gas emissions. Burning gasoline causes each of these.
The EV subsidy is an attempt to reduce oil dependence, as well as carbon emissions that contribute to global warming. Another reason for the subsidy for electric vehicles is to encourage consumers to purchase domestic products instead of foreign-made cars.
The good news is that the goals of the electric car subsidy are being achieved. The number of electric cars is growing, and 25% of Americans are now considering purchasing electric vehicles.
Does the US Give Grants on Electric Cars?
Though a grant and the electric vehicle subsidy do not have to be repaid, there are differences between the two. In contrast to the EV subsidy, grants are for specific purposes beyond tax breaks.
The federal government doesn’t offer grants for buying electric cars. That’s why the electric vehicle subsidy exists. It reduces the cost of buying an EV by giving consumers a rebate on their purchases.
However, some states have incentives that provide grants for converting older vehicles to new electric technologies.
Grants are also available for installing charging stations. If this interests you, familiarize yourself with the cost to charge an electric car before making any final decisions.
And keep in mind that this is not an EV charger subsidy. It’s a gift for installing a charging station.
Who Is Eligible for EV Tax Credit?
To be eligible for government subsidies for electric cars, you must have purchased a light-duty vehicle that can be recharged from an external source. That’s right: the EV subsidy doesn’t typically cover hybrids unless they meet the battery requirements.
The car also has to weigh less than 14,000 pounds to qualify for the subsidy electric vehicles. Additionally, the battery must use at least 4 kilowatt hours. Also, to be eligible for the full value of your $7500 electric car subsidy, you must have driven the vehicle in 2022.
Why 2022? The government subsidies for electric cars are explicitly given to those who are claiming the credit in the year they started driving the vehicle.
As such, if you want to claim your EV subsidy in 2023, you would have had to start driving the vehicle in 2023.
How Do I Claim My 7500 EV Tax Credit?
If you’re interested in claiming your $7,500 EV tax credit, be sure to file the IRS Form 8936. You’ll need to have the VIN number on your car available to complete it.
You won’t qualify for the electric car subsidy if you fill out this form incorrectly. Contact a tax attorney to be sure that the details are correct. That way, you can be eligible for the full subsidy of electric cars.
Your attorney can also help you determine if you’re eligible for the electric vehicle government subsidy at all, as not all cars qualify. Before you file for the electric car subsidy, review the list of eligible vehicles.
Are Electric Cars Tax-Free?
While the government subsidies for electric cars give owners a tax break, the tax status of electric vehicles is more complicated.
With an electric car, you’re not buying gas and, therefore, not paying road tax. You also won’t be charged annual car taxes because your vehicle doesn’t require gasoline or other fuel. Electric vehicles are also exempt from sales tax in many states.
Ship Your Electric Car to Your Door So You Can Claim Your Electric Car Subsidy
The government subsidies for electric cars are an amazing opportunity for Americans to benefit from saving the environment. Take advantage of this electric car subsidy opportunity before the year ends.
If you’re trying to figure out how to ship your electric car so you’re eligible for the government EV subsidy this year, Nexus is a company that can help you. Use our car shipping calculator to get an instant price estimate.
We’ve helped thousands ship their cars so they can take advantage of the subsidy for buying electric cars. You shouldn’t miss out on the government EV subsidy either!
