Not much we get to hear about vehicle tax credits. But there is a belief among people that hybrid, plug-in and electric cars that emit lesser or no amount of carbon or use alternate fuel are generally given tax credits. But not many are sure, about the details.
To clarify these rules, here we would try to brief you with the basics of vehicle tax credit. See if that includes your answers. If not, feel free to ask the experts at Ford Alexandria.
About the Credit
Any credit has to have a worth denoting a certain amount. In recent days we get to hear the phrase “Up to” as a critical modifier to that amount. If someone is leasing an Electric Vehicle, the tax credit will go to the manufacturer who is offering the lease, and not the one who is receiving the lease. The maximum benefit you can get from the credit is a reduction in your monthly payment, but that too isn’t mandatory. The credits are also proportional to the battery capacity of an electric car. For some electric car models, the maximum credit amount can fall even below $7,500.
Electric Car and Vehicle Tax Credit Calculation
The tax credit amount on electric cars is based on the battery size of the vehicle as well. The maximum amount of tax credit would be a $7,500 but the rule begins to phase out when 200,000 vehicles of a particular qualifying model get sold. So many popular hybrid vehicles that run on a combination of gas and electricity become eligible only for much smaller credits while there are many plug-in electric cars that are currently eligible for a full credit amount.
The other criteria for being eligible as a tax crediting vehicle, is having battery packs of at least 4 kWh of energy storage. The criteria also add the rule that these Plug-in hybrids and battery electric vehicles should be capable of being recharged from an external source to qualify for this credit.
Mileage Deduction and Reimbursement
The rule of vehicle tax credit gets softer on self-employed people who use a qualifying electric or hybrid vehicle for their business, and they can really save on their federal taxes. The federal standard mileage reimbursement rate is currently 54.5 cents held per business mile driven. The electric or hybrid vehicles have the required efficiency that can make these vehicles go way ahead in terms of tax savings in comparison to the actual costs of operating the vehicle. This same principle is applicable if you work for a company and they reimbursed you for your mileage. In both ways, owning an electric or hybrid car would benefit you more than merely lowering the expenses of gas and maintenance.
The Bottom Line
As suggested by the experts of the Alexandria Ford dealership, It is always a better idea to make sure about the currently available incentives offered by the state and the local government before you step out to shop a car, especially electric or hybrid ones. One must remember the fact that just a state running a current program on tax credit doesn’t mean that it will continue forever. To stay safe, stay abreast of these notifications and track your mileage accurately so that you can avail the advantage of mileage tax deductions and even company reimbursements.