Get Ready to Save with the Previously Owned Clean Vehicle Credit

Get Ready to Save with the Previously Owned Clean Vehicle Credit

Are you tired of the gas pump pinching your pockets? Want to help the planet while getting a sweet tax break? You’re in luck! Starting in 2023, the IRS is offering a tax credit for purchasing previously owned clean vehicles. So, let’s break down what you need to know to snag this fantastic deal!

  1. Previously Owned Clean Vehicle Credit: The Essentials If you’re considering an eco-friendly ride, this tax credit might be just the thing for you! Here’s the scoop:

    • The credit applies to qualified buyers who aren’t claimed as a dependent on someone else’s tax return
    • You can save up to $4,000 or 30% of the sales price, whichever is less
    • The credit can only be claimed once every three years
    • The vehicle’s sale price must be less than $25,000
  2. Income Limits: Are You Eligible? You may be eligible for the credit if your modified adjusted gross income (MAGI) for the current year or the prior year is less than or equal to:

    • $150,000 for married filing jointly or as a qualifying surviving spouse or widow(er)
    • $112,500 for head of household
    • $75,000 for all other filers

    Keep in mind that MAGI is your adjusted gross income increased by any amount excludedas a result of the foreign earned income exclusion.

  3. Qualified Vehicles: What’s on the Menu? Wondering which vehicles qualify for the credit? Here are the requirements:

    • The vehicle must have a model year at least two years earlier than the calendar year when you buy it (for example, a 2021 model or older if purchased in 2023)
    • The vehicle transfer to the qualifying buyer must be the first transfer to a qualified buyer since August 16, 2022
    • The vehicle must be purchased from a dealer and weigh less than 14,000 pounds
    • The vehicle must be a plug-in hybrid electric, electric, or hydrogen fuel cell vehicle

Ready, Set, Save! With the Previously Owned Clean Vehicle Credit, you can not only help the environment but also enjoy some extra cash in your wallet. So, start shopping for that perfect eco-friendly ride and take advantage of this amazing tax credit opportunity. Happy driving, and even happier saving!

Source: IRS Credits and Deductions Under the Inflation Reduction Act of 2022

***Disclaimer: This communication is not intended as tax advice, and no tax accountant -client relationship results**

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