In August 2022, the Internal Revenue Service (IRS) announced a new tax credit for electric vehicles (EV). Drivers who purchased an EV or plug-in hybrids after December 31st, 2009, will be credited between $2,500 - $7,500. For this credit, qualified EVs are defined as “Plug-in Electric Drive Motor Vehicles” such as passenger vehicles and light trucks. The basic details regarding these amounts can be found below.
|$2,500||Own an EV||Base credit|
|$417||5 KWh capacity battery||Minimum of 5 kilowatt hour capacity battery|
|$417||Over 5 KWh capacity battery||Additional credit added for every kilowatt over 5 hour capacity|
|$7,500||Own an EV||Credit limit|
In addition to the EV Tax Credit, the Inflation Reduction Act was also passed in August 2022, further detailing which vehicles may qualify for the credit. The provisions in the new act will not only benefit North American consumers who purchase EVs, but also the manufacturers. Prior to the Inflation Reduction Act, manufacturers were limited to selling 200,000 EVs that could qualify for the tax credit to consumers. Thankfully, the new act has removed this limitation and has added new guidelines that consumers can benefit from, like the ones listed here.
More Qualifications For EV Tax Credit
Pickup trucks, vans, and SUVs priced below $80,000
Wagons, sedans, and other light vehicles priced below $55,000
Must be purchased on or after 12/31/09
Must be assembled in North America
Buyers for new EVs must meet income requirements
Less than $300,000 household adjusted gross income
Less than $225,000 head of household gross income
Less than $150,000 individual gross income
Buyers for used EVs must meet income requirements
Less than $150,000 household adjusted gross income
Less than $112,500 head of household gross income
Less than $75,000 for individual gross income
Used EV purchased from dealerships eligible for the lower amount of either $4,000 or 30% of sale price as tax credit
Changes Scheduled to Begin in 2024
To qualify for tax credit, EV components cannot be sourced from “foreign entities of concern” (ex. China, Russia, etc)
Dealerships will be permitted to offer consumers the tax credit up-front, at the time of purchase
Additional EV credits will vary by state. Visit your state’s government website to determine if there are more opportunities available.
For more information about which specific vehicles qualify for the IRS EV Tax Credit, click here.