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Whoops, sorry the list I posted is only for BEV's... there's a PHEV list as well from the IRS. I'll let a PHEV fan post the PHEV list heh.
EV Tax Credit
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Okay lets say I see in my area I could get a bolt for 27 thousand. After looking at all the features of the car and other possible cars I finally decided on that one
It would take me a minimum of 15 paragraphs to find out I don’t qualify. Not because the car don’t qualify or my income is to high but because I won’t owe that tax . I don’t notice that because I need a car before my old one wares out ,or whatever reason .
I go to the dealer and we test drive the car . We go through all the financing and so on . And then find out we don’t qualify if the dealer’s financial people choose to tell us . ( The last time I bought an EV they didn’t )
Then say as long as 11-14 months latter when we finally get around to doing our tax’s we find out we aren’t getting that tax back .
You’re obviously not going to be a happy puppy .
I bet this time of year next year we will be reading about a lot of disappointed people .
If they aren’t embarrassed about what happened to them .
It would take me a minimum of 15 paragraphs to find out I don’t qualify. Not because the car don’t qualify or my income is to high but because I won’t owe that tax . I don’t notice that because I need a car before my old one wares out ,or whatever reason .
I go to the dealer and we test drive the car . We go through all the financing and so on . And then find out we don’t qualify if the dealer’s financial people choose to tell us . ( The last time I bought an EV they didn’t )
Then say as long as 11-14 months latter when we finally get around to doing our tax’s we find out we aren’t getting that tax back .
You’re obviously not going to be a happy puppy .
I bet this time of year next year we will be reading about a lot of disappointed people .
If they aren’t embarrassed about what happened to them .
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244 Posts
Just for funsies, I was building/pricing a Silverado/Sierra (ICE). A $79,995 MSRP (before DFC in order to qualify for the EV tax break) truck and 25% down payment results in a monthly 72-month financing payment of $1,000. This is including an estimate for sales tax and doc fees that the vast majority of car buyers finance instead of covering with more cash out of pocket. And you all are worried someone can actually afford this type of purchase, but not have a total $7,500 tax liability (not a tax return; but a tax liability)?
I think the bigger question is whether the BEV buyer who gets a tax break actually applies the resulting $7,500 monies against the principal of their loan balance. I have never seen stats about this, but I would wager that the vast majority of BEV tax rebate recipients fail to plow that tax return money entire into their auto loan balance.
I also doubt any bargain-bin-cheapo-GM-BEV-truck (which would still be a ~$60k MSRP) will be available to an American tax payer before the end of 2024.
I think the bigger question is whether the BEV buyer who gets a tax break actually applies the resulting $7,500 monies against the principal of their loan balance. I have never seen stats about this, but I would wager that the vast majority of BEV tax rebate recipients fail to plow that tax return money entire into their auto loan balance.
I also doubt any bargain-bin-cheapo-GM-BEV-truck (which would still be a ~$60k MSRP) will be available to an American tax payer before the end of 2024.
It would be nice if it could just be used like a rebate instead. As mentioned by Thad, the tax credit relies on your tax liability and withholding. My personal tax liability was close to 5,000 and my withholding close to 7,000. So I would lose out on 500 dollars. This is just an example. Everyone's tax situation is different. Unlike other energy tax credits such as solar, you cannot carry the difference forward to next year. So if you don't have any tax liability, you'll just get all of your withholding back.
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Ok you bring up a good point... the IRS policy is basically discouraging people in your income bracket from trying to get the full tax credit. This is because a household can't get enough tax liability to qualify for the full $7,500 credit unless they have ~$100k (married) or ~$75k (single) income in 2023.
The EV tax credit policy will mean lower earners do not realize the entire $7,500. But my contention is people making below these marks really shouldn't be buying the BEV Silverado in 2023/24 anyway. And if lower earners are buying bargain Chevy Volts, the $7,500 becomes too large compared to the transaction value of the car, and the value of the rebate scales to the amount of that household tax liability as intended.
Specific to the Silverado BEV, the amount of resource required to purchase a Silverado BEV likely harms a normal household at lower income levels. I don't mean this as a shot at you, since I don't know your situation and annual household income. But, the IRA policy is written to basically discourage lower earners from using a $7,500 tax incentive as a motive to get a Silverado BEV (even if such a vehicle were available below a $80,000 MSRP).
I can't seem to find this type of table online, so let me just make the table here for this forum. The 2023 IRS Publication 15-T has the target federal withholding tables that a company/payroll should be using. Here is a quick summary (obviously I'm prone to making mistakes so please double-check my work before you go out and buy a BEV) assuming semi-monthly payroll and Step 2 of Form W-4 is NOT checked. I highlighted the respective pay rates that would result in an annual $7,500 statutory withholding. Yes, I know this is not a tax liability; especially for married filers. But we gotta start somewhere
Married Filing Jointly
| Implied Annual Salary (of individual being taxed) | Statutory Federal Withholding per 15-T (paid semi-monthly x 24 periods in a year) |
| $50,000 | $2,236 |
| $75,000 | $5,236 |
| $93,860 | $7,500 |
| $100,000 | $8,236 |
| $125,000 | $12,022 |
| $150,000 | $17,522 |
| $175,000 | $23,022 |
| $200,000 | $28,522 |
| $225,000 | $34,153 |
| $250,000 | $40,153 |
| $275,000 | $46,153 |
| $300,000 (limit for married filing jointly) | $52,153 |
Single
| Implied Annual Salary (of individual being taxed) | Statutory Federal Withholding per 15-T (paid semi-monthly x 24 periods in a year) |
| $50,000 | $4,118 |
| $69,272 | $7,500 |
| $75,000 | $8,760 |
| $100,000 | $14,260 |
| $125,000 | $20,071 |
| $150,000 (limit for single filers) | $26,071 |
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Yeah every household has a very unique itemized tax deduction and resulting liability. There's no point guessing on each individual situation when trying to set policy/guidance for many.
I was using the payroll tax withholding (zero dependents and exemptions) as a proxy for tax liability since the IRS sets these rates for a reason. Their statutory withholding schedules approximate what a worker at that income level ought to have as a total tax liability. Of course, the IRS puts in a bit extra padding to favor the IRS getting more money first; to be refunded to the taxpayer later. Hence why most people get a tax return even if they don't get EV tax credits, kids, or a mortgage interest deduction.
But back on the topic of this thread, as with all tax incentives they're complicated and people should reasonably do research before buying. It's unfortunate so many people will step into such a big/expensive transaction and not really know what their rebate is worth. But this incentive is not meant to be a reward for buying an EV; it's supposed to be an enabler so a home that would otherwise have difficulty affording a BEV or PHEV could actually budget for and accomplish the purchase.
I just don't see a household making under $125k reasonably budgeting a $79,995 MSRP Silverado BEV making financial sense of it even with a $7,500 tax incentive.
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