EV Tax Credit 2023: See Which Cars Qualify for the $7,500 Tax Break

Sept. 9 is World EV Day, now in its fourth year. While auto companies will probably announce new incentives to encourage people to buy electric vehicles, one of the best incentives has been on the books for some time: the EV tax credit.

But this robust tax break, which offers up to $7,500 toward the purchase of a new electric vehicle, was overhauled by the Inflation Reduction Act.   

Here's what you need to know about the revised EV tax credit, including which cars qualify and how to claim it.

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

What are the requirements for the EV tax credit?

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

• 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.  
• Beginning in 2024, vehicles that contain battery parts from "a foreign entity of concern" will be unable to claim any of the credit. For critical minerals, the cutoff is 2025.
• The manufacturing cap, which disqualified automakers that have manufactured more than 200,000 EVs, has been lifted.
• 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.

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

The Inflation Reduction Act broke the credit into two halves: You can claim $3,750 if at least half of the value of your vehicle's battery components are manufactured or assembled in North America.
You can claim 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 minimum requirements increase in the coming years, with battery components reaching 100% in 2029 and critical minerals maxing out at 80% in 2027.)

The following vehicles remain eligible under the new provisions, which are in effect through Dec. 31, 2032. The list will likely grow as manufacturers submit updated information and change suppliers. You can find the most up-to-date info on FuelEconomy.Gov.

• 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 (all variants)
• 2022-2023 Tesla Model Y (all variants)
• 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 Rivian R1S
  
• 2022-2023 Rivian R1T

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'll need to provide the vehicle identification number for your vehicle.)
This is a non-refundable tax credit, which means you will not receive any balance beyond the point at which your tax liability is reduced to zero.

Can I claim the tax credit on a used EV?

As of 2023, preowned plug-in electric and fuel-cell EVs qualify for a credit of up to 30% of their 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.

Can 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 which models are the year's best and how you can finance a home EV charger.