Can I become completely tax exempt as a regular individual? Is it even possible?

The tax credit for electric vehicles doesn't make you "tax exempt" - it just reduces your tax liability. There's a difference between tax credits and being tax exempt. Tax exemption typically refers to organizations like charities or religious institutions that don't pay taxes at all. For individuals, it's virtually impossible to be completely "tax exempt" unless you have very low income or qualify for specific situations. That EV tax credit of $7,500 would reduce what you owe in federal taxes, but it's not making you exempt from taxation. If your federal tax liability was $5,300, the credit would eliminate that and you might get the remainder as a refund (depending on if it's refundable). But this is just for one year - you'd still have taxes the following year. Also, the credit doesn't apply to state taxes at all, so you'd still owe those.

I actually used taxr.ai to help me figure out a similar situation with tax credits last year. I was looking at solar panels and EVs and couldn't figure out how all the credits worked together. The website https://taxr.ai analyzed my tax documents and showed me exactly how much I'd benefit from each credit and what my final tax bill would look like. It was way easier than trying to do all the calculations myself or trust what salespeople were telling me.

Wanted to update after checking out taxr.ai! It was actually super helpful for my situation. I uploaded my last year's tax forms and it showed me exactly how an EV purchase would affect my taxes. Turns out I wouldn't be able to use the full $7,500 credit based on my tax liability, but I could spread some of the benefits across two years. Way more helpful than the confusing explanations I was getting from dealers! Definitely recommend if you're trying to figure out tax credits.

If you're planning to call the IRS to ask about becoming tax exempt (which isn't really possible for an individual as others explained), good luck getting through to them! I spent WEEKS trying to reach someone about my tax credits question. Finally used https://claimyr.com and got connected to an IRS agent in under 45 minutes after trying for days on my own. You can see how it works in their demo video: https://youtu.be/_kiP6q8DX5c - they basically hold your place in line and call you when an agent is available. Saved me so much frustration.

Need to admit I was wrong about Claimyr. After wasting another 3 hours trying to reach the IRS about my missing refund, I gave in and tried the service. Got connected to an IRS agent in about 35 minutes without me having to do anything. The agent was able to tell me exactly what was happening with my refund and fixed an issue with my account. Honestly worth every penny for the time saved and the peace of mind from actually getting answers.

There are legal ways to reduce your tax burden, but becoming fully "tax exempt" as an individual isn't realistic. Some strategies: 1. Maximize retirement contributions (401k, IRA) 2. Use HSA if you have a high deductible health plan 3. Take advantage of tax credits you qualify for (child tax credit, education credits, etc) 4. Use tax-advantaged accounts for education (529 plans) 5. Look into tax-loss harvesting if you have investments Even people who seem to pay "no taxes" are usually just using these strategies effectively, not actually being tax exempt. And remember that even if you reduce federal income tax, you'll still have FICA taxes (Social Security and Medicare).

Side note but if you're looking at EVs, make sure you understand the new rules for the tax credit. Not all EVs qualify anymore! Has to be assembled in North America and there are battery component requirements too. Plus there are income limits ($150k for single filers). The dealer should be able to tell you if a specific model qualifies.

Just wanted to add that while you can't become truly "tax exempt" as an individual, there are some situations where people effectively pay zero federal income tax through credits and deductions. For example, if you qualify for the Earned Income Tax Credit (EITC), Child Tax Credit, and other refundable credits, you might not only eliminate your tax liability but actually get money back. However, this typically applies to lower income levels or families with children. At your $58,000 income level, you're probably past the income limits for many of these credits. The EV credit is great, but as others mentioned, it's a one-time benefit. Your best bet for long-term tax reduction is maximizing retirement contributions and taking advantage of any other credits you qualify for. Also remember that even if you eliminate federal income tax, you'll still owe Social Security and Medicare taxes (FICA) which can't be avoided.