My current vehicle is on it's death bed and I am trying to do my research before purchasing a new all electric vehicle and one of my biggest considerations is the utilization of the federal tax credit (since EV's tend to be more expensive than their ICE counterparts). According to the US Dept. of Energy website, the federal tax credit is still in place, and according to the US fuel economy website the vehicle I am interested in purchasing meets the qualifications for the full $7,500 tax credit and the manufacturer has not yet met the 200,000 quota. I am trying to learn how this credit is applied, and I found this written by a user in another forum
What is the total amount of federal income tax you and your wife are liable for to the IRS each year? (Don't subtract any amounts your employers withhold for you.) What's your tax liability before you pay the IRS even one penny? THAT's the amount that will be reduced by $7,500. And it can result in a bigger refund IF you've had more than that result withheld.
Line 7 on my 1040 says my total wages (filing jointly with my wife) were $94,872 last year, line 39 says my total tax was $11,384, and line 40 says my total tax withheld was $9,902. Is the total tax figure the amount that the credit is applied toward? If there any other important considerations I have missed or have gotten incorrect please let me know.