New $500 EV Tax Credit Extended for 2025 – All the Details Inside!

Various schemes are being run to promote green energy across the world, and in this direction, the US has taken a new step to encourage electric vehicles (EVs). The $500 EV Tax Credit Extension to be implemented from 2025 will now provide relief to all eco-loving drivers. This scheme will not only help in environmental protection but will also make electric vehicles more affordable for common citizens.

EV Tax Credit Extension 2025 – Why is it special?

The US government has long run several schemes to promote EV adoption. The $7,500 Central EV Tax Credit, which is given under the Inflation Reduction Act (IRA), is already in force. But not everyone is able to take advantage of this credit, especially those who want to buy EVs on a low budget.

To fill this gap, the government has decided to implement an additional tax credit of \$500, which will be applicable on new and used EVs with small or low price. This move is a big relief especially for middle and low income families.

Environment and rising fuel prices – main reasons

The ever-rising costs of fuel and contamination in US have compelled the government to come up in this direction. Not only will use of the electric vehicles lead to reduced pollution but also the dependence on fuel will reduce hence long-run economic gains are going to be experienced as well.

This new tax credit will be useful in meeting the goals set by the government, which requires 50 percent of the vehicle sales to be electric by 2030.

Who will get the benefit of this scheme?

If you live in the US and are planning to buy an electric vehicle in 2025, then you can take advantage of this scheme, but there are some conditions for this –

• Vehicle Cost: New EV must be under $40,000 & Used EV must be under $25,000.
• Income Limit: Maximum Adjusted Gross Income (AGI) should be no more than $150,000 where you’re single or $300,000 for couples who are filing jointly.
• Vehicle Manufacturing Location: The vehicle must be assembled in North America and at least 50% of the battery must be from domestic sources.

On meeting these conditions, you can get a $500 tax credit.

Which vehicles are eligible?

This credit covers many popular models such as the Chevrolet Bolt, Tesla Model 3 (special variants), Nissan Leaf and some plug-in hybrid models.

However, luxury EV models (over $55,000) will not be included in this credit. Used EVs will also be eligible if they have not previously been claimed for the tax credit.

How ​​to claim the tax credit?

• When purchasing a vehicle, the dealership will confirm your vehicle’s eligibility** and provide the $500 benefit directly as a point-of-sale discount.
• After the purchase, you will need to report this credit on your tax return via IRS’s FORM 8936.
• For this, you will have to fill in the vehicle’s VIN number, purchase date and other necessary details.

Is it Non-Refundable?

Yes, this tax credit is non-refundable, i.e. it will only reduce your tax liability. If your tax liability is low, you may not get the full benefit.

Conclusion – Strong initiative towards EV adoption

\$500 EV Tax Credit Extension 2025 is a strategic move by the US government that will promote environment, economic benefits and green technology. This scheme will not only motivate common citizens to buy affordable electric cars but will also contribute significantly to moving America towards clean energy.

If you are thinking of buying an EV in 2025, then this is the right time for you – low cost, tax benefits and contribution to a better environment, all together!

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