Are you thinking about buying an electric car soon? You might want to consider buying by the end of 2022.
The passage of the $369B Inflation Reduction Act includes nearly “bottomless” funding for a $7,500 EV tax credit on new EVs through 2032. What’s not to like, right?
In the long term, the Inflation Reduction Act promises to accelerate electric car affordability for millions of Americans, but tax credits are going to decrease dramatically before ramping up over the long term. In the next couple of years, fewer electric cars will qualify for EV tax credits and the qualification rules for credits will be really confusing.
Let’s start by reviewing which electric vehicles still qualify for EV tax credits in 2022.
2022 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. All foreign manufacturers lost their credits immediately, and according to the IRS, only 20 vehicles still qualify for EV tax credits in 2022.
Here’s the full list:
|Electric Vehicle||Model Years||Incentives|
|Audi Q5||2022||Personalize incentives|
|BMW 330e||2022, 2023||Personalize incentives|
|BMW X5||2022||Personalize incentives|
|Chrysler Pacifica PHEV||2022||Personalize incentives|
|Ford Escape PHEV||2022||Personalize incentives|
|Ford F-150 Lightning||2022||Personalize incentives|
|Ford Mustang MACH-E||2022||Personalize incentives|
|Ford Transit Van||2022||Commercial EV. Not listed.|
|Jeep Grand Cherokee PHEV||2022||Personalize incentives|
|Jeep Wrangler PHEV||2022||Personalize incentives|
|Lincoln Aviator PHEV||2022||Personalize incentives|
|Lincoln Corsair Plug-in||2022||Personalize incentives|
|Lucid Air||2022||Personalize incentives|
|Mercedes EQS SUV||2023||Limited supply. Unlisted.|
|Nissan Leaf||2022, 2023||Personalize incentives|
|Rivian R1S||2022||Personalize incentives|
|Rivian R1T||2022||Personalize incentives|
|Volkswagen ID.4*||2023||Personalize incentives|
|Volvo S60||2022||Personalize incentives|
*Only North America made Volkswagen ID.4 models qualify. Submit VIN number to verify.
What about EV tax credits in 2023?
We have some bad news. We’re still waiting for official guidance from the IRS, but new rules for MSRP price caps and battery manufacturing will result in even fewer electric cars being eligible for EV tax credits in 2023. It will take a couple of years before automakers meet the strict new guidelines for battery manufacturing, in particular.
From January 1, 2023, it looks like the following vehicles might qualify for up to $3,750:
- Tesla Model 3**
- Tesla Model Y***
- 2023 Cadillac Lyriq
- 2023 Chevrolet Bolt
- 2023 Bolt EUV
**only models under $55,000
***only if the government agrees to designate Model Y an “SUV”
Income rules for 2022 vs. 2023
If you’re wealthy and you want to use the EV tax credit, 2022 is the time to buy. There are no income requirements for EV tax credits currently, but starting in 2023, the credits will be capped at $150,000 for a single taxpayer and $300,000 for joint filing households.
A bright spot: State EV incentives
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-$4,000
- 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-$5,000
- Rhode Island: up to $2,500
- Vermont: up to $4,000
To see which state incentives and EV tax credits you qualify for, Browse EVs on EV Life.
How to save on EV incentives now?
If you’d like to turn your post-purchase tax credits and rebates into point-of-sale savings, we offer a new EV Climate Loan (auto loan) that can lower your monthly payments by up to $200/month. Pre-qualify for all your rebates and tax credits and get a loan estimate in seconds. Pre-qualify for an EV Climate Loan.