EV Tax Credit: All the EVs that still qualify for the tax break

Note: This EV tax credit post was updated on updated 1/24/2024 to reflect the latest policy updates from The Treasury Department and to add Volkswagen and Rivian's EV tax credit eligibility .

Are you thinking about buying an electric car soon?

The U.S. Department of the Treasury just published new rules that reduce the number of EVs that qualify initially. However, there are still some great electric vehicles that qualify.

What is the Federal EV Tax Credit?

The Inflation Reduction Act of 2022 renewed and expanded funding for the federal EV tax credit through 2032 for qualified drivers looking to purchase an electric vehicle. Applicants can receive a tax credit of up to $7,500 as an upfront discount at point-of-purchase.

Candidates for the federal EV tax credit are subject to complex qualification requirements regarding the suggested retail price (MSRP), household income, vehicle manufacturing, and sourcing of battery materials that will affect how much of the tax credit they are eligible to receive.

2024 Updates: Instant Rebates

Starting in January 2024, electric vehicle purchasers will no longer need to wait until the subsequent tax season to receive their credit. Instead, drivers will have the option to apply the tax credit at the time of the vehicle purchase in the form of a rebate that essentially acts as a discount on the dealership’s sticker price. Here’s how it works:

• After paperwork is filled out and a sale is determined to be eligible for the tax credit, the dealership credits you that money “in the form of cash, down payment or partial payment for the purchase of the vehicle.”
• The dealership then submits “time of sale” paperwork to the IRS, and the IRS reimburses the dealer the credit amount.

These new guidelines simplify the process for drivers, providing an immediate financial incentive at the point of sale and making dealers, not individuals, collect the tax credit from the IRS.

Which Electric Vehicles Still Qualify for the Tax Credit?

When the new requirements took effect on January 1, 2024, the list of eligible vehicles got quite a bit shorter. Here is a list of vehicles that still make the cut:

EVs that still qualify for EV Tax Credits

Source: Fueleconomy.gov updated 1/24/2024

Why do so few EVs qualify? (Battery Sourcing Requirements)

If an electric vehicle meets the North American vehicle manufacturing requirements, the value of the EV tax credit is determined by two battery requirements:

• To qualify for $3,750 of the EV tax credit, 50% of battery minerals must come from North America (or from a country with a U.S. free trade agreement or from materials recycled in North America). This mineral threshold is set to gradually increase to 80% over the next four years.
• Half of the battery components must be made or assembled in North America to qualify for the other $3,750. This benchmark will eventually be raised to 100%.

In the long term, the EV tax credit promises to accelerate EV affordability for millions of Americans. Although EV tax credits have just decreased dramatically, more vehicles will qualify for EV tax credits as automakers move vehicle manufacturing and battery sourcing onshore to meet new policies designed to create more clean energy jobs in North America.

EV Tax Credit: Income Limit

If you decide on an electric vehicle that qualifies for an EV tax credit, you also need to meet new IRS rules for Adjusted Gross Income (AGI) limits. If you exceed these income limits, you will not qualify for an EV tax credit:

• $300,000 for married couples filing jointly
• $225,000 for heads of households
• $150,000 for all other filers

If your Adjusted Gross Income exceeds these requirements, you might consider leasing. A leasing company can receive an EV tax credit and may incorporate up to $7,500 in tax credit savings into your leasing package.

A bright spot: State EV rebates & tax credits

While federal EV tax credits may be less valuable and more confusing for the next couple of years, all is not lost. EV rebates and tax credits from your state remain a steady constant. State incentives apply to a wider range of EVs and PHEVs (plug-in hybrids) and do not have the limiting manufacturing requirements of the federal EV tax credit.

Here’s a list of states that offer generous rebates & tax credits:

• California: up to $9500 (with an Clean Cars 4 All trade in)
• Colorado: up to $7500
• Connecticut: up to $7500
• Massachusetts: up to $6000
• New York: up to $2000
• Oregon: up to $2500-$7,000
• Rhode Island: up to $2,500
• Vermont: up to $4,000

Want to see what state and local EV incentives you qualify for?

Try EV Life’s Savings Calculator

Maximize savings with an EV Climate Loan

When you apply for the EV Climate Loan with EV Life, we help you:

• Pre-qualify for more than financing. EV Life’s application process is easy and fast. We’ll ensure that you qualify for every tax credit, rebate, and other incentive you’re eligible for, then help you file all the paperwork with our “Turbo Tax-style” incentive filing tools.
• Bundle charging. An EV Life loan enables you to get an instant quote for home charger installation and bundle it into auto financing, reducing your upfront costs.
• One low payment. The EV Life loan applies all your savings directly to your loan, significantly reducing your monthly payment.

Don’t navigate the complex and ever-shifting EV incentive process alone. Financing with EV Life guarantees the best prices and the lowest rates on your EV, saving the planet while saving your pocketbook.

Get pre-qualified today to find out how much you could save on your electric vehicle.