Although President Biden is eager to accelerate the nation’s rapid transition to electric vehicles, he’ll subsidize your EV purchase only if you buy American. And the options right now are slim.
The Biden administration on Monday released its list of EVs that qualify for a full $7,500 federal tax credit. Out of more than 90 EV models available today, only 10 qualify and they’re all from American car companies.
Eight are all-electric, and two are plug-in hybrids.
They are:
- Chrysler Pacifica
- Ford F-150 Lightning pickup
- Lincoln Aviator Grand Touring
- Cadillac Lyriq
- Tesla Model 3
- Tesla Model Y
- Chevrolet Bolt
- Chevrolet Blazer
- Chevrolet Equinox
- Chevrolet Silverado pickup
There’s an upper limit on the suggested retail price of $55,000 for the Chevy Bolt and the Tesla Model 3. The limit is $80,000 on the rest. The Pacifica minivan and the Lincoln SUV are the two plug-in hybrids.
Seven additional vehicles qualified for half-credits, or $3,750:
- Ford Escape plug-in hybrid
- Ford E-Transit
- Ford Mustang Mach-E
- Jeep Grand Cherokee plug-in hybrid
- Jeep Wrangler plug-in hybrid
- Lincoln Corsair Grand Touring
- Tesla Model 3 standard range rear-wheel drive
The first six must be sold for less than $80,000 to qualify; the Model 3, $55,000.
The average price of an electric vehicle sold in the U.S. was $58,725, according to Kelley Blue Book, compared with an average $47,713 for all new cars.
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No longer eligible are cars from Volkswagen, Hyundai, Kia, Nissan, BMW, Volvo and Rivian. EVs from those carmakers, under rules interpreted by the U.S. Treasury, don’t source enough of their battery components or raw materials from North America to qualify.
California’s complicated EV subsidy program remains in full effect. Depending on household income and several other factors, state rebates on a variety of vehicles can range from nothing to several thousand dollars, on top of whatever the federal government offers.
More than 90 EV models are available for purchase, according to the Alliance for Automotive Innovation, an industry group that represents the major carmakers. The alliance has been supportive of the EV switch but has expressed frustration with the complicated and repeatedly shifting requirements coming out of the Biden administration.
John Bozzella, chief executive of the alliance, said Monday that affordable electric cars are essential to mass adoption and that subsidies should be “broadly available to as many customers and on as many EVs as possible.”
How that will pan out over the years is yet to be determined. Under the Inflation Reduction Act passed last year, electric vehicle makers must use increasing amounts of parts and materials sourced in North American, for both batteries and the vehicles themselves. Vehicles must be manufactured in North America as well.
Before the legislation, the subsidies were widely available to almost all electric car models. Although the list of qualified models may increase as automakers adapt, Bozzella said the U.S. probably reached the “high water mark” for EV subsidies and they will now be harder to come by.
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The stringent made-in-America rules were included under pressure from Sen. Joe Manchin III (D-W.Va.), whose support was essential for the bill’s passage.
Automakers are spending billions to make the transition from internal combustion powertrains to battery electric systems, but most of the batteries are made outside the U.S. The vast majority of the materials used in battery production — nickel, cobalt, lithium and others — are mined and processed outside the U.S. as well, much of it in China.
As such, the Inflation Reduction Act’s home-country sourcing requirements will be difficult to achieve. Several new U.S.-based battery factories have been announced, but whether the supply will meet demand is yet to be determined. Expanded mining and processing of raw minerals will take years, in large part due to regulatory red tape, an issue that some in Congress are seeking to correct.
The longer it takes to onshore production of batteries and raw materials, the shorter the list of subsidy-qualified vehicles will be.
The new subsidy program takes effect Tuesday.
FAQs
Here Is the EPA's List of EVs Eligible for the Federal Tax Credit
- 2024 Acura ZDX ($7500) ...
- 2024 Cadillac Lyriq ($7500) ...
- 2024 Chevrolet Blazer EV ($7500) ...
- 2024 Chevrolet Equinox EV ($7500) ...
- 2024 Ford F-150 Lightning ($7500) ...
- 2024 Honda Prologue ($7500) ...
- 2024 Tesla Model 3 Performance, Long Range ($7500)
EVs that qualify for the federal tax credit
| EV Make, Model, Year | Tax credit amount | MSRP limit |
|---|
| Honda Prologue (2024) | $7,500 | $80,000 |
| Nissan, LEAF S (2024) | $3,750 | $55,000 |
| Nissan, LEAF SV PLUS (2024) | $3,750 | $55,000 |
| Rivian, R1S Dual Large (2023-2024) | $3,750 | $80,000 |
28 more rowsMay 30, 2024
To qualify for the tax credit, your modified adjusted gross income cannot exceed a certain threshold: $150,000 for single filers, $225,000 for heads of households and $300,000 for married couples. You can qualify based on your income for the year you take delivery of the vehicle or the year before.
How to claim $7 500 EV tax credit? ›
If you purchased a qualifying plug-in EV or clean vehicle during the required timeframes (either after December 31, 2009, through December 31, 2022, or January 1, 2023, through December 31, 2032), you can claim the respective credit by filling out Form 8936 and attaching it to your Form 1040 when you file your tax ...
Does the $7500 tax credit apply to hybrids? ›
Tax Credits and Incentives
Some all-electric and plug-in hybrid vehicles qualify for a $3,700 to $7,500 federal tax credit. Many states also offer additional incentives for purchasing new EVs. Find tax credits and incentives in your state.
What EVs do not qualify for tax credit? ›
To qualify for a tax credit of up to $7,500, a new EV or eligible plug-in hybrid vehicle (PHEV) must meet certain rules: A vehicle's MSRP must not exceed certain limits, so pricey EVs, such as the GMC Hummer EV, Lucid Air, and Tesla Model S, won't qualify. For SUVs, pickup trucks, and vans, the threshold is $80,000.
How many years can you claim EV tax credit? ›
Under the IRA, the EV tax credit is in place for 10 years, until December 2032, for electric vehicles placed into service this year. The tax credit is taken in the year you take delivery of a qualifying clean vehicle. The credit is up to $7,500 for new vehicles.
Will EV prices go down in 2024? ›
One reason battery costs are falling: Lithium, a critical component in many EV batteries, is becoming cheaper, according to a recent report by the International Energy Agency (IEA). Lower battery costs ultimately translate into more affordable electric vehicles in 2024.
What is the new tax credit for 2024? ›
The tax year 2024 maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers who have three or more qualifying children, an increase of from $7,430 for tax year 2023. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
Is the EV tax credit worth it? ›
The credit is worth up to $7,500 for new vehicles and $4,000 for used vehicles. To claim the EV tax credit, the vehicle will need to meet certain efficiency requirements, as well as assembly requirements related to the battery and minerals used to construct the battery.
Such elections could be for two Clean Vehicle Credits or one Clean Vehicle Credit and one Previously Owned Clean Vehicle Credit, but cannot be for two Previously Owned Clean Vehicle Credits. Accordingly, spouses may each transfer no more than two Clean Vehicle Credits each tax year.
How does EV tax credit work if I don't owe taxes? ›
Used EV shoppers who don't owe anything on their taxes can choose to transfer the EV tax credit to the dealership at the time of sale, in the same way they would for a new car purchase.
How to claim $7500 EV tax credit 2024? ›
File Form 8936 with your tax return
You must file Form 8936 when you file your tax return for the year in which you take delivery of the vehicle. This is true whether you transferred the credit at the time of sale or you're waiting to claim the credit when you file.
How much income do you need to qualify for the $7500 EV tax credit? ›
These are the annual income limits for the $7,500 new vehicle credit: $300,000 for married couples filing a joint tax return; $225,000 for heads of household; and $150,000 for single tax filers.
Can you get more than one 7500 EV tax credit? ›
No, you cannot claim federal tax credits for more than 1 EV per filer in a single tax year. The vehicle can only be claimed twice in its lifetime—once when it is purchased new (up to $7,500 in credit) and once when it is sold as used by a dealer (up to $4,000 in credit).
Which vehicles qualify for tax write-offs? ›
Heavy SUVs, pickups, and vans over 6000 lbs. and mainly used for business can get a partial deduction and bonus depreciation. Typical work vehicles without personal use qualify. Cargo vans and box trucks with no passenger seating can qualify. Specialty vehicles like ambulances and hearses often qualify.
Does the 2024 Honda CRV Hybrid qualify for tax credits? ›
Since traditional hybrid vehicles rely primarily on combustion and do not use a plug to charge, they do not qualify for tax credits at the federal level.
Can you get the $7500 EV credit more than once? ›
The vehicle must be at least two model years older than the calendar year in which it is purchased. The used EV tax credit will only apply once in the vehicle's lifetime. Subsequent owners will not be eligible. Once a buyer has taken the federal used EV credit, they are not eligible for another credit for three years.
Does the 2024 Prius Prime qualify for tax credits? ›
Qualify for $4,500 EV Tax Credit Lease Customer Cash on a new Prius Prime when you finance through Southeast Toyota Finance. Cash from Southeast Toyota Finance, on the lease of a new 2024 Prius Prime from participating dealer's stock and subject to vehicle availability.
