Does the VW ID.4 qualify for a $7500 tax credit?

February 15th, 2024 by

There are many reasons to make the switch to an electric vehicle (EV), including incredible environmental benefits, fuel savings, and lower operating costs. Recently, federal tax credits have made EVs even more appealing by offering financial incentives for choosing an eco-friendly vehicle. Among the diverse array of electric cars, the Volkswagen ID.4 has captured the attention of many drivers with its cutting-edge technology, sleek design, and practicality. If you’re considering the Volkswagen ID.4, the federal EV tax credit can make a big difference in the overall cost of your purchase.

The availability of the credit depends on several key factors, such as the vehicle’s MSRP, its battery components and capacity, and your modified adjusted gross income (MAGI). In this article, we explore what the $7,500 tax credit is, what vehicles qualify, and the eligibility criteria. Keep in mind that tax laws and incentives are subject to change, and it’s advisable to check with the IRS or a tax professional for the latest and most accurate information based on the current tax year.

What Is the $7,500 Tax Credit for EVs?

The EV tax credit is a federal incentive aimed at encouraging drivers to purchase EVs rather than traditional gasoline alternatives. This federal incentive for EVs provides a tax credit of up to $7,500 for the purchase of a new, qualified EV or plug-in hybrid or up to $4,000 for the purchase of a used electric car. The exact credit amount depends on the vehicle’s battery capacity.

For vehicles placed in service from Jan. 1, 2023, to April 17, 2023:

  • $2,500 base amount.
  • An additional $417 for a vehicle with a minimum battery capacity of 7 kWh.
  • An additional $417 for each kilowatt hour of battery capacity beyond 5 kWh.
  • Up to $7,500 in total.

This means you can take advantage of at least $3,751 credit: $2,500 + $417 × 3 (the credit amount for a vehicle with 7 kWh of battery capacity).

What’s New for 2024?

You can now choose to either claim a nonrefundable credit on your tax return or transfer the credit to the dealership to lower the purchase price of the car. To qualify for either form of credit, you’ll need to meet certain income thresholds, and the vehicle needs to be eligible under the IRS guidelines.

It’s important to note that state and local governments may offer additional incentives for EV purchases, such as rebates, tax credits, or other perks that can lower the upfront cost of buying an EV. These incentives vary widely by location.

Which Vehicles Qualify for the $7,500 Tax Credit?

As of January 2024, the following fully electric and plug-in hybrid vehicles may be eligible for either a full or partial tax credit:

  • Volkswagen: The ID.4 Pro, ID.4 Pro S, ID.4 Pro S Plus, ID.4 AWD Pro, ID.4 AWD Pro S, ID.4 AWD Pro S Plus, ID.4 S, and ID.4 Standard are eligible for up to $7,500 in tax credit. They have an MSRP limit of $80,000.
  • Tesla: The 2023 and 2024 Tesla Model 3 Performance, Model X Long Range, Model Y AWD, Model Y Performance, and the 2024 Model Y RWD are eligible for up to $7,500 in tax credit. The MSRP limit on each is $55,000.
  • Ford: The F-150 Lightning (2022-2024) with the standard or extended range battery is eligible for up to $7,500. It has an MSRP limit of $80,000.
  • Chrysler: The Pacifica plug-in hybrid (2022-2024) is eligible for up to $7,500 in tax credit. It has an MSRP limit of $80,000.
  • Chevrolet: The Bolt EV (2022-2023) and Bolt EUV (2022-2023) are each eligible for up to $7,500 in tax credit. The MSRP limit is $55,000.

How To Qualify

To qualify for a credit of up to $7,500, you must buy the EV for personal use and drive it mainly within the United States. You must also meet the following criteria:

MSRP Limit

Here are the limits:

  • Large EVs, such as vans, SUVs, and pickup trucks, must have an MSRP of $80,000 or less to qualify for the credit.
  • Smaller EVs, such as sedans and passenger cars, should cost less than $55,000 to qualify.
  • Used vehicles need to have an MSRP below $25,000 to meet the requirement.

Income Limit

Whether you’re eligible for the tax credit depends on your MAGI. You can use this figure from the year you take delivery of the car or the year before delivery. This gives you more options to use the credit. Here are the income limits to qualify for the tax credit:

  • Single consumers: $150,000 for new EVs or $75,000 for used EVs.
  • Head of household: $225,000 for new EVs or $112,500 for used EVs.
  • Married filing jointly: $300,000 for new EVs or $150,000 for used EVs.
  • Married filing separately: $150,000 for new EVs or $75,000 for used EVs.

Used EV Requirements

If you’re buying a used EV, you can receive up to $4,000 in tax credits every three years, limited to 30% of the car’s purchase price. Some other qualifications include:

  • It must be a plug-in electric or fuel cell EV with at least 7 kWh battery capacity.
  • There must be only one transfer of the vehicle.
  • The sale price of the EV must be below $25,000.
  • The EV model must be at least 2 years old.
  • The EV must weigh less than 14,000 pounds.

Visit Capistrano Volkswagen

By taking advantage of the tax credits, it can be a financially savvy move to switch to an EV, such as the Volkswagen ID.4. If you’re thinking of making the change, visit Capistrano Volkswagen in San Juan Capistrano, California, to browse the latest inventory of qualifying EVs on the market. For more information about the Volkswagen ID.4, check out our FAQ.

 

Posted in VW ID.4