A new tax credit was unveiled in August 2022 by the Internal Revenue Service (IRS) for electric vehicles (EV). Drivers who buy EVs or plug-in hybrids after December 31st, 2009, can receive a credit of $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. Below is a summary of these amounts.
|
Credit Amount |
Qualification |
Details |
|
$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 |
The Inflation Reduction Act, which further defines which vehicles can qualify for the credit, was also passed in August 2022. New provisions in the act will benefit both consumers and manufacturers of electric vehicles in North America. In the past, manufacturers were limited to selling 200,000 EVs that could qualify for the tax credit to consumers. As a result of the new act, this limitation has been removed, and consumers can now take advantage of a number of new regulations, such as those below.
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 credits for EVs will vary from state to 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.
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