The IRS offers a “green” tax credit (that’s better than a deduction) of between $4,000 and $6,000 off the purchase of an electric vehicle. And, in a new ruling, the IRS has said the credit applies to street legal golf carts. That means your golf cart must meet federal safety standards, and must be meant to be driven on roads with posted speed limits of 35 mph or less. If your golf cart is just meant to be used on a golf course, the credit isn’t available.
While there’s an element of amusement to this, think about your elderly parents, who may be living in a retirement community. Golf carts are a great way to get around. A $4000-6000 tax credit is probably 50% or more of the total cost of the cart itself. So if you were to buy your parents a golf cart, you would be entitled to take the tax credit.
We love tax credits, because they reduce your net taxes payable. In contrast, a tax deduction lowers your net income before taxes. You’ll pay less tax in both cases, but with a tax credit you get a better bang for your buck.