Comment by anannymoose a day ago
So, should I wish to purchase a vehicle this tax year, I tell my HR to adjust my income withholding such that I owe 7,500$ come tax time and then reap the rewards?
Or is there more to the incentive structure?
Adjust my withholding to generate a debt to Th enticement that I claim the rebate on? I think you’re thinking the other direction.
I’m confused here, wouldn’t me underpaying on my income generate a liability that I can then claim this rebate on?
Let's make up an example. Let's say you earn $75,000/year and the tax rate is 10%. So you owe $7,500 in taxes. That is your tax liability. It doesn't matter if you have your employer deducting $144 from your weekly paycheck or $0 from your weekly paycheck.
https://apps.irs.gov/app/understandingTaxes/student/hows.jsp
You can still get a refund with this tax credit, but it has to be a refund of taxes you paid through things like your payroll tax.
Non-refundable means that if the rebate drives your owed taxes below zero you don't get the negative tax debt back.
If you don't earn much money most of your paid taxes go to SS and medicare rather than income tax, so the rebate may not do anything for you. But if you make at least median income you should be able to fully use this rebate.
If you're retired and buy one of these trucks you'd be wise to realize $100k in investment gains in that year in order to fully exploit the tax credit.
Withholding isn't relevant here. Non refundable means it can't cause the government to net pay you money: that is to say, it can't make your refund larger than your withholding.