There are a couple of television commercials I look forward to every holiday season. There's the Corona Extra "Oh Tannenpalm" spot that's been airing for 30 years. And, of course, there's Hershey's Kisses handbell choir, which has been running even longer.
Not as welcome, but as inescapable this time of year are the automaker ads with cars bearing giant bows.
I've never gotten a car for Christmas. And those ads don't do much to convince me to do so, especially since they tend to be for luxury vehicles.
But if you are in the market for a new ride, either over the holidays or after, you might want to consider an elective vehicle (EV). The reason isn't only environmental. The purchase could provide a nice tax break.
And this holiday season, the Internal Revenue Service has approved even more autos that are eligible for the tax credit, which maxes out on some models at $7,500. The just-listed EVs are made by BMW, Honda, Jaguar, Mini, Range Rover and Subaru.
New EVs, old tax break: For more than a decade, Internal Revenue Code Section 30D has provided a tax credit for what are officially known as Qualified Plug-in Electric Drive Motor Vehicles. This covers not only passenger autos, but also light trucks.
The actual value of the credit depends on several factors, but as noted a few paragraphs ago, the potential tax savings could be as much as $7,500.
The exact amount takes some figuring and before you buy, you need to pay attention to your chosen automakers' EV sales.
Once a manufacturer sells a lot of these alternative energy autos (or trucks), the value of the tax break starts to disappear. That's the case for Tesla and some General Motors EVs.
But don't despair. There are plenty of other car companies, including some high-dollar luxury auto manufacturers, that produce plug-in vehicles. The full range and EV credit-available options are found on a special IRS Qualified Plug-In Electric Drive Motor Vehicle Credit web page.
New EV tax break models: That page recently was updated. The IRS has added to its running online list some new EVs that that qualify for the tax credit. They are the:
- 2020 and 2021 BMW i3 Sedan with Range Extender, i3s Sedan, and i3s Sedan with Range Extender;
- 2021 Honda Clarity Plug-in Hybrid;
- 2021 model year Jaguar IPace (HSE, SE, S models);
- 2021 MINI Cooper S E Hardtop;
- 2021 Range Rover PHEV, and Range Rover Sport PHEV; and
- 2020 and 2021 Subaru Crosstrek Hybrid.
The IRS says the newly EV credit eligible BMW, Honda, Jaguar and Mini models all qualify for the maximum $7,500 credit.
The Range Rover models will get purchasers a $6,295 EV credit. The Subaru tax credit maximum is $4,502.
Claiming the EV tax credit: If you're in the market of a new auto and an electric one works for you, check out the credit availability. It could make a difference not only on what's in your garage, but also your taxes since credit is dollar-for-dollar reduction of any tax you might owe.
By offsetting your tax liability, the EV credit might even zero out what you owe Uncle Sam. Sorry, but it's a nonrefundable credit. That means it won't get you a tax refund after erasing your tax bill. But hey, you'll save on gas!
To claim this tax saving, check out my earlier Tax Form Tuesday post on the IRS form you must file if you do buy a tax-credit eligible EV. That's Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two- or Three-Wheeled Plug-in Electric Vehicles).
Happy Holidays and Merry Motoring!
You also might find these items of interest:
- Electric vehicle tax credits favor the wealthy
- 17 states now impose some fees on electric autos
- IRS let up to $83 million in improper EV tax credits slip through, says watchdog report
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