New Clean Car Credit for EVs

Much was made about the Inflation Reduction Act of 2022, giving car shoppers incentives to purchase a new or used EV until 2032, thanks to what many called the new clean car credit. You need to follow specific guidelines for your household income, where the electric vehicle is assembled, and the MSRP. The federal EV tax credit for new cars could allow taxpayers to lower their income taxes by as much as $7,500 in 2023.

The good news is the federal EV tax credit for new cars was updated for January 2024, allowing you to take advantage of the new EV tax credit to lower your purchase costs. You would effectively lower the price of an EV by anywhere from $2,500 to $7,500, depending on the vehicle you purchase for your Loudoun County driving. 

Keep reading our guide to the new clean car credit. We’ll answer, “How does the clean car credit work?” It could help you lower the purchase price of a quality vehicle on our lot. 

How Does the Clean Car Credit Work?

The initial iteration of the new clean car credit pertained only to brand-new EVs or even plug-in hybrids, no matter where they were made or what brand. However, the federal government clarified in the spring of 2023 that EVs had to meet specific criteria. Further, owners received the federal EV tax credit for new cars when they filed their taxes. It was a credit that lowered their tax bill. 

However, how the clean car credit works now is different. The federal electric vehicle tax credit is more specific. We’ll dive into those details next.

What Cars Qualify for the Federal Electric Vehicle Tax Credit?

See the list of criteria for the cars that qualify for the federal electric vehicle tax credit here:

• Draws propulsion using a traction battery that has at least 5 kilowatt-hours (kWh) of capacity
• Uses an external source of energy to recharge the battery
• Has a gross vehicle weight rating (GVWR) of up to 14,000 pounds
• It has to be primarily driven in the United States
• The MSRP can’t exceed $80,000 for vans, SUVs, and pickup trucks
• The MSRP can’t exceed $55,000 for other vehicles
• Must be assembled in the United States

For BMW models, this means certified pre-owned versions of the BMW XM plug-in hybrid or a new BMW X5 with a starting MSRP of $72,000. All other new BMW electric vehicles are assembled outside of the United States or have an MSRP above the stated limits. You could get a minor federal electric vehicle tax credit over the maximum of $7,500, but it will lower your overall price.

You could also look over our pre-owned inventory to see if there are any EVs other than BMW that qualify you for the federal electric vehicle tax credit.

Am I Eligible for the Federal Electric Vehicle Tax Credit? 

You are eligible to get this new EV tax credit if your adjusted gross federal income meets these limits:

• $300,000 for married couples filing jointly
• $225,000 for heads of households
• $150,000 for all other filers

How Long Will the New Clean Car Credit Last For? 

When the Inflation Reduction Act of 2022 was passed in the United States, Americans in the DC Metro Area became eligible for these tax credits until 2032. We can help you with the paperwork to ensure you take full advantage of these EV tax credits!

Test Drive EVs for Sale at BMW of Sterling

Ready to own an electric vehicle? Contact us to schedule a test drive with our team near Dulles Airport. Our finance team will help you determine whether you qualify for the entire federal electric vehicle tax credit.