EV Tax Credit 2023-2024 Qualifications

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4 min to read

As electric vehicles gain popularity in the market, there have been notable shifts in the criteria determining eligibility for EV tax credits. These changes‌ allow eligible individuals to claim substantial benefits of up to $7,500. This blog will help you make more sense of the 2024 updates and how they might affect your ability to access incentives. 

What is the electric vehicle tax credit?

The Electric Vehicle Tax Credit stands as a financial incentive aimed at boosting the adoption of EVs. Historically, this nonrefundable federal credit functioned as a direct reduction of total tax liability, providing a monetary benefit for those who met ‌eligibility criteria. 

Essentially, the credit operated as a dollar-for-dollar reduction in the total amount of federal income taxes owed, rather than being a deduction from taxable income. 

2024 EV tax credit changes

Discount option

As of January 1, 2024, qualifying individuals who purchase a vehicle can choose to get an immediate “tax credit” without having to file tax paperwork. So, rather than a tax credit, the buyer could get a discount at the point of sale. 

Income cap

The credit also sets limits on income qualifications. According to the IRS, you can use your modified adjusted gross income (MAGI) from either the year the car is delivered, or the year prior. 

If your income exceeded the limit one year but fell below limit the other year, you may still qualify for the credit.

Here are the income limits for new cars:

Tax-filing statusMAGI
Single$150,000
Head of household$225,000
Married, filing jointly$300,000
Married, filing separately$150,000

Here are the income limits for used cars:

Tax-filing statusMAGI
Single$75,000
Head of household$112,500
Married, filing jointly$150,000
Married, filing separately$75,000

Price caps

To qualify for the EV tax credit, vans, SUVs and pickup trucks must have a manufacturer’s suggested retail price (MSRP) of $80,000 or less. Sedans and passenger cars are capped at $55,000 and used cars are capped at $25,000. MSRP doesn’t include taxes or other dealership fees. 

Made in America requirements

To encourage automakers to manufacture vehicles and parts in North America, the government has implemented stricter rules about which EVs are eligible for the tax credit. 

To qualify for the first half of the credit ($3,750), some battery components must be produced or assembled in North America. For the remaining portion, some critical minerals used in the battery must be extracted or processed in the United States (or in a U.S. free-trade agreement partner country) or they must have been made from materials recycled in North America. 

Starting in 2024, the percentage of components required to meet these criteria will increase. See below for a list of vehicles that qualify for full or partial credit.

Used electric cars now eligible for tax credit

Previously,  the EV tax credit excluded used cars; now, qualifying used EV purchases can be awarded a tax credit of up to $4,000 (limited to 30% of the purchase price).

With this new rule comes various qualification requirements, including:

  • The car model must be at least two years old.
  • The car must be plug-in electric or fuel cell with at least seven-kilowatt hours of battery capacity.
  • Must be the first transfer of the vehicle.
  • The vehicle must weigh less than 14,000 pounds.
  • The purchase price of the vehicle must be $25,000 or less.
  • The tax credit can only be claimed once every three years.

Which cars qualify for a federal EV tax credit?

Below are the fully electric and plug-in hybrid makes and models eligible for the credit. For the most up-to-date information about eligible vehicles, visit this site.

If you’re ready to start shopping, check out this article on the best electric cars in 2024 to gain valuable insight into a variety of models.

Car make and modelTax credit amount
Audi Q5 55 TFSI Quattro (2024-2025)$3,750
BMW X5 xDrive50e (2024)$3,750
Cadillac Lyriq (2023-2024)$7,500
Chevrolet Blazer (2024)$7,500
Chevrolet Bolt (2022-2023)
Chevrolet Bolt EUV (2022-2023)
$7,500
Chevrolet Equinox (2024)$7,500
Chevrolet Silverado (2024)$7,500
Chrysler Pacifica PHEV (2022-2024)$7,500
Ford E-Transit (2022-2023)$3,750
Ford Escape (2022-2023)$3,750
Ford F-150 Lightning (2022-2023)$7,500
Ford Mustang Mach-E (2022-2023)$3,750
Jeep Grand Cherokee PHEV 4xe (2022-2024)$3,750
Jeep Wrangler PHEV 4xe (2022-2024)$3,750
Lincoln Aviator Grand Touring (2022-2023)$7,500
Lincoln Corsair Grand Touring (2022-2023)$3,750
Nissan LEAF S$3,750
Nissan LEAF SV PLUS$3,750
Rivian R1S (2022-2023)$3,750
Rivian R1T (2022-2023)$3,750
Tesla Model 3 Long Range AWD (2023)
Tesla Model 3 Performance (2022-2023)
Tesla Model 3 Standard Range RWD (2022-2023)
$7,500
Volkswagen ID.4 AWD Pro
Volkswagen ID.4 AWD Pro S
Volkswagen ID.4 AWD Pro S Plus
$7,500
Volkswagen ID.4 Pro
Volkswagen ID.4 Pro S
Volkswagen ID.4 Pro S Plus
$7,500
Volkswagen ID.4 S
Volkswagen ID.4 S Standard
$7,500

How to claim the federal EV tax credit

You must file Form 8936 with your tax return to claim the credit. According to the IRS, you can only claim the credit for the tax year the vehicle was delivered to you—not the year it was purchased. This is a general rule, so make sure to do your research so you don’t miss out on the credit for your specific case. 

New for 2024, you can transfer the credit to the dealership for an immediate discount on the car.

Clean vehicle credit and additional EV incentives

These EV tax credits are part of the Clean Vehicle Credit, formerly called the Inflation Reduction Act, instated in 2022. The goal of this federal law is to curb inflation by promoting clean energy and investing in domestic energy production.

In addition to the Clean Vehicle Credit, some states in the U.S. have their own rebates and incentives. For example:

  • California has the Clean Vehicle Rebate Project (CVRP), which offers rebates between $1,000 and $7,500 for the purchase or lease of new, eligible electric and other zero-emission vehicles.
  • Minnesota offers an E-ZPass account credit for those who drive an electric vehicle in the state.
  • Virginia residents pay no sales tax on the first $15,000 of qualified new EV purchases from August 1, 2023 and July 31, 2025.

See if there are any programs in your state here. Keep in mind that some of these incentives may not allow you to claim a state-level credit on top of the federal one.

The updated EV tax credit is not just a financial incentive, but a step towards a sustainable future. It empowers consumers to make environmentally-friendly choices and accelerates the shift towards electric vehicles. 

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