EV Tax Credit 2023: See Which Cars Qualify for the $7,500 Tax Break
It's World EV Day, a great time to look into the federal government's lucrative tax break for going electric.
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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.
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)
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.
Used EV income cap
Modified adjusted gross income
Head of household
Married, filing jointly
Married, filing separately
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.
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.