New Tax Credit For Electric and Hybrid Vehicles

Electric vehicles (EVs) are potentially eligible for a new tax credit to be introduced by the Internal Revenue Service (IRS) in August 2022.  EV or plug-in hybrid vehicle buyers can receive a credit of $2,500 to $7,500 after December 31st, 2009.  For this credit, qualified EVs are defined as “Plug-in Electric Drive Motor Vehicles” such as passenger vehicles and light trucks.  These amounts are summarized below.

August 2022 also marked the passing of the Inflation Reduction Act, which further defined which vehicles were eligible for the credit.  North American consumers and electric vehicle manufacturers will benefit from the act's new provisions.  Previously, manufacturers were limited to selling 200,000 EVs that qualified for the tax credit.  New regulations, like those below, were introduced by the new act as a result of removing this limitation.

 

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

 

It will vary from state to state whether EVs qualify for additional credits.  Find out if there are more opportunities available by visiting the website of your state's government!  You can find out which specific vehicles qualify for the IRS EV Tax Credit by clicking here.