To qualify for the federal tax credit for electric vehicles (EVs), the vehicle must meet several requirements, including:
- The MSRP of the EV must be below $55,000.
- The EV must have a battery size of at least 7 kWh and a gross vehicle weight rating less than 14,000 pounds.
- The EV must be a new purchase, not a used one.
- The EV must be a plug-in electric vehicle or fuel cell electric vehicle.
- The EV must not have been claimed as a dependent on another persons tax return.
- The modified adjusted gross income must not exceed $75,000 for individuals, $112,500 for heads of households, and $150,000 for joint returns.
Additionally, beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. The credit also applies to zero-emission vans, SUVs, and trucks with MSRPs up to $80,000. The new credit also expands to commercial fleet customers. There is also a new federal tax credit of $4,000 for used EVs priced below $25k. The income threshold is lower for used EV buyers: $150,000 for joint filers, $112,500 for a head of household, and $75,000 for an individual. However, the rules about where the car was made or where the battery comes from don’t apply to used vehicles.
It is important to note that not all EVs qualify for the full tax credit. The Inflation Reduction Act broke the credit into two halves: You can claim $3,750 if the EV meets only one of the requirements for battery components and minerals, and $7,500 if it meets all of them. The IRS website provides a list of qualified EVs.
