Did you buy a plug-in vehicle in 2017? Being environmentally conscious may entitle you to a generous tax break.
Strategy: Claim the tax credit for plug-in vehicles on your 2017 return. The credit is allowed for qualified vehicles propelled by electric power.
With automakers ramping up more plug-in models, the credit is more accessible than before.
Here’s the whole story: The credit is equal to $2,500, plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt-hours of capacity, $417, plus an additional $417 for each kilowatt-hour of battery capacity in excess of 5 kilowatt-hours. The maximum credit is limited to $7,500.
The plug-in vehicle must be acquired new for use or lease and not for resale. It must have a gross vehicle weight rating of less than 14,000 pounds. Also, original use of the vehicle must begin with the taxpayer claiming the credit and the vehicle has to be used predominantly in the U.S.
Caution: The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the U.S. (determined on a cumulative basis for sales after 2009). Due to slow progress on this front, the credit is still readily available.
Tip: Both the House and Senate versions of the tax reform bill would repeal the credit for plug-in vehicles for 2018 and beyond.