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How To Save Money When Purchasing A New Electric Vehicle
Electric vehicles (EVs) can save consumers money, reduce air pollution, and protect public health. See how you can take advantage of federal funding to purchase a new EV.
Background
Electric vehicles (EVs) use an electric motor instead of an internal combustion engine, which is used in gas-powered vehicles. EVs use an internal battery to power the electric motor and have fewer moving parts than gas-powered vehicles. EVs do not need oil changes, spark plugs, or fuel filters, making their maintenance costs lower than gas-powered vehicles. The U.S. Department of Energy’s Local Fuel Savings Calculator is a useful tool to determine how much money you can save when you switch to an EV. In addition, as part of the federal Inflation Reduction Act, you may be able to use a tax credit to purchase a new EV (see below).
Federal Tax Credit and Requirements
1. Federal New Clean Vehicle Tax Credit
a. If you purchase an eligible vehicle in 2023 or later and qualify, you can receive up to a $7,500 credit under Internal Revenue Code Section 30D to buy a new EV. If you purchased a new clean vehicle in 2022 or earlier, you may still qualify a tax credit up to $7,500.
b. For vehicles purchased in 2023 or later, the Clean Vehicle Tax Credit must be initiated and approved at the time of sale. For vehicles purchased in 2022 or earlier, you will need to file an amended tax return.
c. The tax credit is in effect until 2032.
d. To claim your tax credit, file the time-of-sale report with your tax return.
2. IRS requirements for vehicles purchased in 2023 or after
a. The EV must be purchased for your use and not for resale.
b. The EV must primarily be used in the U.S.
c. Your modified adjusted gross income (AGI) may not exceed:
i. $300,000 for married couples filing jointly or a surviving spouse
ii. $225,000 for heads of households
iii. $150,00 for all other filers
d. The seller must provide you with a paper copy of a time-of-sale report when the purchase is complete. You will need to keep this copy for your records and to claim your tax credit. The seller must also report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.
3. Vehicle qualifications for vehicles purchased in 2023 or after
a. The vehicle must be made by a qualified manufacturer.
b. The vehicle’s manufacturer’s suggested retail price (MSRP) may not exceed:
i. $80,000 for vans, sport utility vehicles, and pickup trucks
ii. $55,000 for other vehicles
c. The gross vehicle weight rating must be less than 14,000 pounds.
d. The vehicle must have a battery capacity of a least 7kwh.
e. The vehicle must meet critical mineral and battery component requirements.
f. The vehicle must undergo final assembly in North America.
Arizona Related Benefits
a. Arizona Public Service, Salt River Project, and Tucson Electric Power have programs to save EV owners money. The programs, which differ for each utility, range from an EV rate plan to financial support to help purchase an EV charger for your home.
b. EVs in Arizona are exempt from emissions testing requirements.
c. EVs in Arizona are considered an Alternative Fuel Vehicle (AFV) and are able to use the High Occupancy Vehicle (HOV) freeway lanes at any time regardless of the number of passengers, provided the vehicle has a current AFV license plate.
In addition, there are significant financial and air quality benefits for local governments in our state to replace retiring light-duty cars and trucks with EVs. Learn more in Electric Fleets for Arizona and Electric Vehicles Save Money for Government Fleets, reports by the Arizona PIRG Education Fund and Frontier Group.
If you or someone you know need help paying for utility bills or appliances — including air conditioning, you can contact Wildfire, a non-profit organization with partnerships across the state of Arizona. The Arizona Department of Economic Security (ADES), through the Low Income Energy Assistance Program (LIHEAP), offers additional help with utility bills for qualified households.
*Please note the above information taken from federal government and Arizona utility websites is subject to change. We recommend checking the relevant website(s) for updates. We also recommend checking out our webpage for additional opportunities to save money and save energy: www.savingenergytips.org
For more information: [email protected] or (602)252-9227.
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Authors
Diane Brown
Executive Director, Arizona PIRG Education Fund
Diane E. Brown has worked with the State PIRGs for over 35 years, over half serving as the Executive Director of Arizona PIRG. She is a leader in efforts to protect consumers from unfair marketplace abuses and unsafe products; promote 21st century energy and transportation options; and foster an accessible and accountable government. Diane frequently works with diverse entities; advocates and testifies before elected and governmental officials; and appears on television and radio and in newspapers across the state. Diane’s leadership has helped to secure public interest victories at the Arizona Legislature, the Arizona Corporation Commission, and various state agencies. Diane is a recipient of awards from the Arizona Capitol Times, Phoenix Business Journal, League of Women Voters of Arizona, and Arizona League of Conservation Voters.
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