Hi pr8993,
Great job planning ahead for the tax credit! One piece of information that would be needed is your filing status, as there are income limitations. For example, if you filing status for 2023 will be single, your Modified Adjusted Gross Income can not exceed $150,000.
IF you are below the income limitation , and meet the other clean vehicle eligibility requirements, the refund will reduce your tax liability prior to applying your withholdings. In your example, your $17,000 of tax would be reduced by the $7500 tax credit, and then the $20,000 tax withholdings applied to remaining tax, and resulting refund. In your example, there would be no need to reduce your withholdings to receive more of the credit.
Here are details about qualified vehicles, https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after.
I hope you find this information helpful!
Connie
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