The electric vehicle tax credit has been around for some time now, but with the introduction of the Build Back Better Act, it has seen a significant improvement. Prior to the new changes, taxpayers could claim an average of $4,000 in EV tax credit.
This number has been increased to a maximum of $12,500. While the increase is feasible enough for many taxpayers, the best part is that the credit is entirely refundable. In a way, if you don’t end up owing too much tax, Uncle Sam is ready to give you more than ten grand. Though this applies to all-electric vehicles, it’s a question for many to figure out how much they would get for purchasing a Tesla, the most popular EV in the United States.
This article will breakdown down your EV tax credit for purchasing a Tesla, along with other details about this improved tax credit.
How does the credit work?
First and foremost, regardless of the electric vehicle you get, you’re granted a $4,000 tax credit. This is the base of the EV tax credit, and it’s the same as it was. So, there are no changes to how much you initially get for an electric vehicle, but we wouldn’t talk about this if there weren’t further improvements, would we?
Battery pack bonus
On top of the initial $4,000 tax credit, you get an extra $3,500 if the battery pack is at least 40 kilowatt-hour. For Teslas, this isn’t a problem as the minimum is well over this threshold. With the two added, the EV credit you get is $7,500.
US-based manufacturer bonus
In addition to the $7,500 you get, there is an extra $4,500 up for grabs if the electric vehicle manufacturer is US-based, meaning that the vehicles were manufactured in the United States. This brings the tax credit you get for a Tesla. Unfortunately, this is all you can get as Tesla is the only car manufacturer in the United States without a unionized workforce.
Also, you can get an extra $500 for EVs that have batteries made in the United States. Some models qualify for this, but the majority don’t. Check your car’s specifications to see where the batteries were made.