Note: This EV tax credit post was updated on April 21, 2023 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 non-refundable tax credit of up to $7,500.
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.
Let’s start by reviewing which electric vehicles still qualify for EV tax credits in 2023.
2023 EV Tax Credits
When President Biden signed the Inflation Reduction Act on August 17, a new rule took effect requiring that final assembly of EVs must occur in North America to qualify for a EV tax credit going forward. Under the new Treasury rule, eligible models can receive between EV tax credits of $3,750 to $7,500, depending on whether their battery minerals, their battery components, or both meet the domestic battery content rules.
There are 23 EVs that still qualify for EV tax credits in 2023 and 2024 according to the IRS’s FuelEconomy.gov website.
Federal EV Tax Credits for Plug-in Electric and Fuel Cell Electric Vehicles Purchased in 2023 or After April 18, 2023.
|Make||Model||Year||EV Tax Credit||MSRP Limit||Calculate incentives|
|Chevrolet||Bolt EUV||2022-2023||$7500||$55,000||Personalize incentives|
|Chrysler||Pacifica PHEV||2022-2023||$7500||$80,000||Personalize incentives|
|Ford||E-Transit||2022-2023||$80,000||Commercial EV. Not listed.|
|Ford||Escape Plug-in Hybrid||2022-2023||$3,750||$80,000||Personalize incentives|
|Ford||F-150 Lightning||2022-2023||$7500||$80,000||Personalize incentives|
|Ford||Mustang Mach-E||2022-2023||$3,750||$80,000||Personalize incentives|
|Jeep||Grand Cherokee PHEV 4xe||2022-2023||$3,750||$80,000||Personalize incentives|
|Jeep||Wrangler PHEV 4xe||2022-2023||$3,750||$80,000||Personalize incentives|
|Lincoln||Aviator Grand Touring||2022-2023||$7500||$80,000||Personalize incentives|
|Lincoln||Corsair Grand Touring||2022-2023||$3,750||$80,000||Personalize incentives|
|Tesla||Model 3 Standard Range Rear Wheel Drive||2022-2023||$3,750||$55,000||Personalize incentives|
|Tesla||Model 3 Performance||2022-2023||$7,500||$55,000||Personalize Incentives|
|Tesla||Model Y All-Wheel Drive||2022-2023||$7,500||$80,000||Personalize incentives|
|Tesla||Model Y Long Range All-Wheel Drive||2022-2023||$7,500||$80,000||Personalize incentives|
|Tesla||Model Y Performance||2022-2023||$7,500||$80,000||Personalize incentives|
Note: If you bought your EV before April 18, 2023, you can also check EV tax credit eligibility on FuelEconomy.gov.
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, 40% 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 2023
If you decide on an electric vehicle that qualifies for an EV tax credit, you also need to meet new 2023 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 $2,000-$7,000
- Colorado: up to $2500
- Connecticut: up to $7500
- Illinois: up to $4,000
- Massachusetts: up to $2500
- New York: up to $2000
- New Jersey: up to $4,000
- Oklahoma: up to $5,500
- Oregon: up to $2500-$7,000
- Rhode Island: up to $2,500
- Vermont: up to $4,000
To see which rebates and tax credits you qualify for, Browse EVs.
EV Climate Loan: Getting the Most Out of Your EV Incentives
Traditional auto lenders don’t believe EVs should be financed differently than gas-powered cars, but here at EV Life, we do.
Instead of waiting 6-18 months to get your tax credits and rebates back, our EV Climate Loan enables you to take advantage of your qualified EV tax credits and rebates upfront, lowering your loan payments by up to $200/month.
How our EV Climate Loan works:
- Pre-qualify in minutes.
Pick your EV and pre-qualify for all your tax credits and rebates based on personalized qualifications specific to you.
- Finance your EV for less.
Instead of waiting 6-18 months to benefit from EV incentives, applying for an EV Climate Loan enables you to take advantage of your tax credits and rebates instantly upfront to dramatically lower your payments.
- Drive big savings anywhere.
You can use your EV Climate Loan to purchase your new EV online or at nearly any dealership, ensuring you get the price and features you want.
- Apply incentives more easily.
Once you drive off the lot in your new EV, EV Life helps you automate the tax credit and rebate filing process through our website–making it easier to repay the deferred incentives in your loan.
If you’re in the market for a new EV, don’t let the sticker price deter you. Let EV Life help you take advantage of every tax credit, rebate, and incentive available to you.
Ready to see how much you could save?
About The Author: Peter Glenn
Peter Glenn is Founder & Co-CEO of EV Life, the best place to finance electric vehicles for less.
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