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The US Treasury Department has announced new guidance on the electric vehicle tax creditWorth $7,500, the tax break was overhauled by the Inflation Reduction Act of 2022. Among other additions, the law established income limits and price caps and required that a vehicle’s final assembly be in the US.
Most of the guidelines have gone into effect already, but final battery and mineral standards were delayed while the Treasury Department hashed out how it would define processing, extraction and recycling.
That guidance is out now and will take effect on April 18. For a vehicle to qualify for the full $7,500 credit next month, 50% of the value of its battery components must be manufactured or assembled in North America and 40% of its critical minerals must be sourced in the US or in a trade-partner country.
The Treasury Department won’t release the list of EVs that meet these standards until April 17, adding more complexity to an already confusing process. Here’s what you need to know if you’re claiming the EV credit for tax year 2022, buying an electric vehicle now or just thinking about it for the future.
For more on electric vehicles, get the lowdown on the best models for 2023, and see how many public charging stations there are in your state.
What is the electric vehicle tax credit?
To encourage Americans to move away from gas-powered automobiles, the federal government allows taxpayers who buy a qualified plug-in, hybrid or fuel-cell vehicle to claim a credit on their tax return, under IRS Code Section 30D.
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Known as the EV tax credit or the clean vehicle credit, it’s equal to $2,917 for a vehicle with a battery capacity of at least 5 kilowatt hours (kWh), plus $417 for each kWh of capacity over 5 kWh, with a maximum of $7,500.
The credit is nonrefundable, so you can’t get back more money than you owe in taxes.
Which cars qualify for the EV credit in tax year 2022?
To qualify for the credit on your 2022 tax return, your vehicle must have been purchased before Jan. 1, 2023, be for your own use and be driven primarily in the US. The vehicle also must have an external charging source and a gross vehicle weight rating of under 14,000 pounds. If you purchased the vehicle last year, it must also have been produced by a manufacturer that hasn’t sold more than 200,000 EVs in the US. In practice, that makes 2022 models from Tesla and Ford ineligible, though this stipulation has been lifted for 2023. In addition, if you bought your EV between Aug. 17 and Dec. 31, 2022, it must have undergone final assembly in North America.
According to the IRS, you don’t have to worry about the final assembly requirement if you “entered into a written binding contract” after Dec. 31, 2021, but before August 17, 2022. (It’s a good idea to check with the IRS or your tax preparer to be certain, though.)
Below is the list of approved 2022 car models from the Department of Energy’s Alternative Fuels Data Center website. (You can also enter your automobile’s vehicle identification number, or VIN, on the Department of Energy website.) As noted, some manufacturers have reached the maximum number of EVs they could sell and still be eligible for the full credit.
Approved 2022 vehicles
|Vehicle||Manufacturer Sales Cap|
|BMW X5 xDrive45e (PHEV)|
|Chevrolet Bolt EUV||Manufacturer sales cap met|
|Chevrolet Bolt EV||Manufacturer sales cap met|
|Chrysler Pacifica PHEV|
|Ford Escape PHEV|
|Ford F-150 Lightning|
|Ford Mustang MACH E|
|GMC Hummer EV Pickup||Manufacturer sales cap met|
|GMC Hummer EV SUV||Manufacturer sales cap met|
|Jeep Grand Cherokee 4xe|
|Jeep Wrangler 4xe|
|Lincoln Aviator PHEV|
|Lincoln Corsair PHEV|
|Tesla Model 3||Manufacturer sales cap met|
|Tesla Model S||Manufacturer sales cap met|
|Tesla Model X||Manufacturer sales cap met|
|Tesla Model Y||Manufacturer sales cap met|
|Volvo S60 Recharge|
How do I claim the clean vehicle credit on my taxes?
To claim the credit for an EV you took possession of in 2022, file IRS Form 8936 with your 2022 tax return. (You will need to provide the VIN for your vehicle.)
What if I bought an EV before 2022 but didn’t claim the credit?
If you missed claiming the credit for an electric vehicle purchased before 2022, you may be able to claim it by filing an amended return for the tax year when you took possession of it.
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What are the changes to the EV tax credit for 2023?
The Inflation Reduction Act made several major changes to the tax credit, including extending it for nine more years, to 2032, and making certain used EVs eligible. Other updates also took effect on Jan. 1, 2023:
- 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. (The MSRP does not include taxes and other fees.)
- 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.
Income cap for EV tax credit
|Head of household||$225,000|
|Married, filing jointly||$300,000|
|Married, filing separately||$150,000|
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.
EVs that are eligible for the tax credit from January to April 2023
Car buyers are in a bit of limbo right now, with income caps and price limits for eligible EVs already in place but details on which models meet battery and mineral requirements still to be determined. If you bought or will buy an EV between Jan. 1 and April 17, 2023, the IRS says that these makes and models qualify for the credit.
|2023||BMW X5 xDrive45e (PHEV)|
|2023||Chevrolet Bolt EV|
|2023||Jeep Grand Cherokee 4xe|
|2023||Jeep Wrangler 4xe|
|2023||Lincoln Aviator PHEV|
|2023||Lincoln Corsair Grand Touring|
|2023||Mercedes EQS SUV|
|2023||Tesla Model 3|
|2023||Tesla Model S|
|2023||Tesla Model X|
|2023||Tesla Model Y|
|2023||Audi Q5 TFSI Quattro|
|2023||BMW X5 xDrive45e|
|2023||Jeep Grand Cherokee 4xe|
|2023||Jeep Wrangler 4xe|
|2023||Lincoln Aviator Grand Touring|
|2023||Lincoln Corsair Grand Touring|
|2023||Volvo S60 Recharge|
|2023||Volvo S60 t8 Recharge|
What cars will qualify for the EV tax credit after April 18?
On March 31, the Treasury released additional guidance for battery manufacturing and mineral sourcing that take effect on April 18, 2023. The department won’t release a list of qualified models until the regulations are published in the Federal Register on April 17, when it will also share details on how much of the credit each qualifies for. Standards for income level and vehicle price are already set, which can help you narrow your options. But if you are considering purchasing an EV on or after April 18, check with the manufacturer or dealer about its eligibility. GM has said that at least three of its cars — the Cadillac Lyriq and the new Chevrolet Equinox EV SUV and Blazer EV SUV — already qualify for the full $7,500 credit.
Can I claim the EV tax credit on a used EV?
Beginning in tax year 2023, qualifying plug-in electric or fuel-cell EVs can qualify for a tax credit of up to $4,000, limited to 30% of its purchase price. 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 purchased it in 2023, for example, it must have a model year of 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
|Filing status||Modified adjusted gross income|
|Head of household||$112,500|
|Married, filing jointly||$150,000|
|Married, filing separately||$75,000|
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.