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Tax Credit Questions

I understand that the $7500 federal credit is taken off at the year of purchase for that tax year.

Is the tax credit from the tax of the vehicle or is it from income tax? Or would you just get the credit regardless?

Do you have to have income or have paid tax for that year to get the credit? If so, why? and how much income do you have to make in order to get the credit?

What if there are two buyers? How does that get credited?

I just want to make sure I have no surprises and cover everything before we go through with the purchase.

Thank you for all of your help!

@astraussmd - Your credit should only be that low if your federal income tax liability is low. If your tax liability is $7500 or more, you should get the full amount. Generally that means people with a high income get $7500 (unless you have so many other deductions that your income tax obligation is less than that). It's the people with low income who are penalized.

@cmlaff - Yes, the EV tax credit can be claimed against the taxpayer's tax liability, including AMT. However, there is a second credit (alternative fuel refueling infrastructure) that can be claimed against the taxpayer's tax liability, NOT including AMT.

They don't make it easy.

Anyone hear anything about Obama's 2014 budget proposal calling for an increase in the tax credit to $10,000 per year? - Could you provide a little more detail? I could not find anything in the instructions that said the credit is reduced based on adjusted gross income.

@sandy_frank@ver - Didn't happen, but he is calling for conversion of the $7500 credit to a point of sale rebate:

The 10K applied to cars under 45K. Not relevant.

Regarding astrausses's post, I believe the tax credit we have now has some different rules (more favorable to the EV buyer) than they had in past years.

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