How to Claim the $7,500 Electric Vehicle Tax Credit and Which Cars Qualify for It

In April, the US Treasury Department disclosed which electric vehicles met the strict new standards required to qualify for the revamped EV tax credit, which is worth up to $7,500. Less than a dozen are eligible for the full incentive now, almost all from American manufacturers.  

The Inflation Reduction Act, signed in August, overhauled the lucrative tax break, adding income limits, price caps and other provisions. It also broke the credit into two parts, requiring vehicles to meet sourcing requirements for battery components and "critical minerals" to qualify for both.    

Read more: Tough New Emission Standards Could Drive Up EV Sales

While most of the new guidance went into effect in January, the mineral and battery standards were delayed while the Treasury determined how it would define key terminology like processing and extraction.

The changes to the credit have trimmed the number of models eligible in the short run, but the Biden administration has said that, in the long run, they will result in more people benefiting and more American companies manufacturing zero-emission vehicles.

For more on electric vehicles, see how many charging stations there are in your state and lay your eyes on the first hybrid Corvette.

How do I claim the EV tax credit?

To claim the tax break, known as the Qualified Plug-In Electric Drive Motor Vehicle Credit, you will need to file IRS Form 8936 with your tax return.(You will need to provide the VIN for your vehicle.)

You can only claim the credit once, when you purchase the vehicle. In addition, it is a nonrefundable tax credit, which means will not receive any balance beyond the point at which your tax liability is reduced to zero.

Which models are eligible for the full $7,500 EV tax credit?

These vehicles remain eligible under the new provisions, which are in effect through Dec. 31, 2032. The list will likely grow as "some qualified manufacturers have yet to submit information," the Treasury Department said in a statement. You can find the most up-to-date info on FuelEconomy.Gov.

Since the initial list was announced on April 17, Volkswagen submitted additional documentation that made all versions of its ID 4 eligible for the full $7,500 credit. 

• 2022-2023 Chrysler Pacifica plug-in hybrid
• 2022-2023 Ford F-150 Lightning (standard and extended range)
• 2022-2023 Lincoln Aviator Grand Touring
• 2022-2023 Tesla Model 3 (Performance)*
• 2022-2023 Tesla Model Y (Performance, all-wheel drive, long-range all-wheel drive)
• 2023 VW ID 4 (all variants)
• 2023-2024 Cadillac Lyriq
• 2022-2023 Chevrolet Bolt (EV and EUV)
• 2024 Chevrolet Silverado
• 2024 Chevrolet Blazer
• 2024 Chevrolet Equinox

Which EVs qualify for $3,750 of the EV tax credit?

These models meet only one of the requirements for battery components and minerals and are eligible for half the credit.

• 2022 Ford e-Transit
• 2022 Ford Escape Plug-in Hybrid
• 2022-2023 Ford Mustang Mach-E (standard and extended range)
• 2022-2023 Jeep Grand Cherokee PHEV 4xe
• 2022-2023 Jeep Wrangler PHEV 4xe
• 2022 Lincoln Corsair Grand Touring 
• 2022-2023 Tesla Model 3 Standard Range RWD
• 2022-2023 Rivian R1S
• 2022-2023 Rivian R1T
  

After Rivian submitted documentation to the IRS proving its 2023 R1T and R1S meet the critical minerals requirement, certain configurations of both vehicles are now eligible for the partial credit.

Which cars no longer qualify for any credit?

A number of vehicles were eligible at the start of the year but do not meet the new standards. You can only claim a credit if the vehicle was received -- not just purchased -- on or before April 17, 2023. 

If you purchased an EV in a previous year but missed claiming the credit, you may still be able to claim a credit by filing an amended return for the tax year when you took possession of it.

What are the new battery and mineral standards?

Currently, you can claim $3,750 of the $7,500 EV tax credit if at least half of the value of your vehicle's battery components are manufactured or assembled in North America and the other $3,750 if at least 40% of critical minerals -- like graphite, lithium and cobalt -- are sourced from the US or a trade partner. Both requirements increase in the coming years.

Battery components:

• 60% in 2025
• 70% in 2026
• 80% in 2027
• 90% in 2028
• 100% in 2029

Critical minerals:

• 50% in 2024
• 60% in 2025
• 70% in 2026
• 80% in 2027

I bought my EV in 2023 but before April 18. Is it eligible? 

These makes and models qualify for the credit if they were received between Jan. 1 and April 17, 2023, according to the IRS. 

What are the other changes to the EV tax credit?

The Inflation Reduction Act made several major changes to the tax credit:

• The manufacturing cap, which disqualified automakers that have manufactured more than 200,000 EVs, has been lifted.
• There is a price cap on qualifying EVs. For passenger cars, the manufacturer's suggested retail price, or MSRP, must be $55,000 or less. For vans, SUVs and light trucks, the ceiling is $80,000.
• Starting in 2024, the credit can be implemented at the point of sale as "cash on the hood," meaning you can apply it toward the purchase price of your vehicle.  
• Also starting next year, vehicles that contain battery parts from "a foreign entity of concern" -- a classification that includes China and Russia -- will be unable to claim any of the credit. For critical minerals, the cutoff is 2025.
• There is also a ceiling on the adjusted gross income to qualify for the credit.

For the most part, these changes took effect on Jan. 1, 2023, and will remain in effect until Jan. 1, 2032. Always check the IRS website for updates.

Can I claim the tax credit on a used EV?

Beginning in 2023, plug-in electric or fuel-cell EVs can qualify for a credit of up to 30% of its purchase price, maxing out at $4,000.

There are certain restrictions:

• The used EV tax credit can only be claimed once in a vehicle's lifetime. Subsequent owners will not be eligible.
• The MSRP of the car must be $25,000 or less.
• The car must be at least 2 years old. If you bought it in 2023, it must be from model year 2021 or earlier.
• Used vehicles purchased before 2023 are not eligible.
• The vehicle must have been purchased from a qualified dealer who reports the transaction to the IRS.
• The vehicle must otherwise meet the requirements for the EV credit.

Below are income caps for owners of used EVs wishing to claim the credit.

Do individual states have EV tax incentives?

In addition to the federal EV tax credit, a number of states offer rebates for clean vehicles. Some can't be taken in conjunction with the federal credit, so be sure to get all the information before claiming anything.

California's Clean Vehicle Rebate Project offers credits of between $1,000 and $7,000 for the purchase or lease of certain new EVs, plug-in hybrids and fuel-cell vehicles. EnergySage, an online marketplace for home solar-energy solutions, has a list of state rebate programs.

The Energy Department's Alternative Fuels Data Center has information on various incentives offered by states, utilities and private organizations.

Do I get a tax credit for installing an EV charger?

The Inflation Reduction Act also extended the tax break for residential charging systems through 2032 and made it retroactive to Jan. 1, 2022.

It's worth $1,000, or 30% of the cost of buying or installing the system, whichever is less.

The credit now also applies to bidirectional charging equipment, which lets you use your EV to power other appliances or even your home. Not many models have that capability, but it can be handy in an outage or other emergency.

To claim the Alternative Fuel Vehicle Refueling Property Credit, you must file IRS Form 8911. 

For more on EVs, find out how you can finance a home EV charger and get under the hood with Tesla's new EV motor.