Hi @praveena354,
The Clean Vehicle Credit reduces your overall tax liability, by a maximum of $7,500. A breakdown of the credit and how it is calculated is here: https://turbotax.intuit.com/tax-tips/going-green/understanding-the-new-clean-vehicle-credit/L6Y0JrGN....
Your tax withholdings throughout the year are not directly related to your tax liability. For example, if $250 is withheld from a weekly paycheck for federal taxes each year, this will equal $13,000 in tax withholdings (250 x 52). If this withholding is higher than your tax liability, you will receive a refund, and if lower than your tax liability, will result in further tax due.
Your tax liability is calculated based on your taxable income, separate from your withholdings throughout the year. The Clean Vehicle Credit reduces your tax liability, which will generally result in a larger refund if tax withholdings are not modified. Your initial tax liability is shown on line 16 of the 2022 Form 1040, the Clean Vehicle Credit would reduce this amount by up to $7,500. You are eligible for the credit if line 16 (Tax) is above 0. You will only get the full amount of the credit, however, if your tax liability is at least $7,500.
You can verify if a particular vehicle qualifies here: https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit
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