EV Tax Credit 2024: Rules and Qualifications for Electric Vehicle Purchases

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The 2024 electric vehicle tax credit has been expanded and modified. Here are the rules, restrictions and how to qualify.

People who buy new electric vehicles may be eligible for a tax credit as high as $7,500, and used electric car buyers may qualify for up to $4,000 in tax breaks.
New this year, consumers can choose between claiming a nonrefundable credit on their tax returns or transferring the credit to the dealer to lower the price of the car at the point of sale, giving taxpayers more flexibility in how to apply the benefit.
However, there may be some hiccups for consumers as the changes roll out. Fewer cars are qualifying for the benefit in 2024 than previously, as battery manufacturing restrictions tighten.

Here's what you need to know about the federal tax incentives for electric vehicles and an overview of which cars may qualify for the new credit according to the IRS.

What is the electric vehicle tax credit?​

The electric vehicle tax credit, or the EV credit, is a nonrefundable tax credit offered to taxpayers who purchase qualifying electric vehicles or plug-in hybrid vehicles. Nonrefundable tax credits lower your tax liability by the corresponding credit amount, but do not result in a refund of any excess credit amount.
In 2024, taxpayers can opt to either claim the tax credit on their federal returns or transfer the credit to an eligible dealership. For those who choose to transfer the credit, dealerships would then be able to either lower the cost of the vehicle by the corresponding credit amount or provide the consumer with a cash equivalent

To qualify for either option, your income must fall beneath certain thresholds, and the vehicle you plan to purchase must also meet several IRS specifications, including price caps and manufacturing guidelines.

Which cars qualify for a federal EV tax credit?​

As of January 2024, the following fully electric and plug-in hybrid vehicles may be eligible for either a full or partial tax credit if delivered on or after Jan. 1, 2024.
The IRS urges taxpayers to use the tool on the FuelEconomy.gov website for the most up-to-date information on eligible models. You can filter by purchase scenario, model year, and vehicle type and determine which car is eligible based on its date of delivery. Be sure to check with the dealer as well, the IRS warns, because some versions of the cars below may not qualify.

Car Make and Model	Tax Credit Amount	MSRP Limit
Chevrolet
Bolt (2022-2023)Bolt EUV (2022-2023)	$7,500.	$55,000.
Chrysler
Pacifica PHEV (2022-2024)	$7,500.	$80,000.
Ford
Escape (2022-2024)	$3,750.	$80,000.
F-150 Lightning: Standard, Extended Range Battery (2022-2024)	$7,500.	$80,000.
Jeep
Grand Cherokee PHEV 4xe (2022-2024)	$3,750.	$80,000.
Wrangler PHEV 4xe (2022-2024)	$3,750.	$80,000.
Lincoln
Corsair Grand Touring (2022-2024)	$3,750.	$80,000.
Rivian
R1S: Dual Large, Quad Large (2023-2024)R1T: Dual Large, Quad Large, Dual Max (2023-2024)	$3,750.	$80,000.
Tesla
Model 3 Performance (2023-2024)	$7,500.	$55,000.
Model X Long Range (2023-2024)	$7,500.	$55,000.
Model Y AWD (2023-2024)Model Y Performance (2023-2024)Model Y RWD (2024)	$7,500.	$55,000.
Volkswagen
ID.4 AWD ProID.4 AWD Pro SID.4 AWD Pro S Plus ID.4 ProID.4 Pro SID.4 Pro S Plus ID.4 SID.4 Standard (2023-2024)	$7,500.	$80,000.

How to qualify for the 2024 EV tax credit​

Price cap​

Vans, SUVs and pickup trucks must have an MSRP, or manufacturer's suggested retail price, of $80,000 or less to qualify for the credit. Other vehicles, such as sedans and passenger cars, are capped at $55,000. For used vehicles, the price cap drops to $25,000.
For new vehicles, the MSRP, as defined by the IRS, is the base retail price provided by the manufacturer, plus the retail price of each accessory or optional piece of equipment that is physically present on the car at the time of delivery to the dealer. For purposes of claiming the credit, MSRP does not include taxes and other fees added on by the dealer
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.

Income limit​

Along with price caps on cars, the EV tax credit also sets limits on the modified adjusted gross income that taxpayers can make in order to qualify.

New EVs​

• Single and married filing separately: $150,000.
• Head of household: $225,000.
• Married filing jointly: $300,000.

Used EVs​

• Single and married filing separately: $75,000.
• Head of household: $112,500.
• Married filing jointly: $150,000.

A nice bonus here is that, per the IRS, you can use your MAGI from either the year the car is delivered, or the year before delivery
[3]
. This means if your income exceeded the threshold one year, but was below the cap during the other year, you may still be able to snag a credit.

If your income precludes you from qualifying, there are also several tax strategies you can consider to lower your income throughout the year, such as maxing out your 401(k) or contributing to an HSA or FSA.

Final assembly requirements​

To be eligible for the credit, vehicles must have had final assembly in North America. You can reference the National Highway Traffic Safety Administration’s VIN, or vehicle identification number, database to check out a car’s final assembly details.
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Used EV tax credit qualifications​

Qualifying used EV purchases can fetch taxpayers a credit of up to $4,000, limited to 30% of the car’s purchase price. Some other qualifications:

• Used car must be plug-in electric or fuel cell with at least 7 kilowatt hours of battery capacity.
• Only qualifies for the first transfer of a vehicle.
• Purchase price of car must be $25,000 or less.
• Car model must be at least two years old.
• Vehicle must weigh less than 14,000 pounds.
• Credit can only be claimed once every three years.

How the electric vehicle tax credit is calculated​

The new tax credit, worth up to $7,500, is made up of battery and sourcing requirements, each adding up to half of the credit. If the car meets both requirements, it is eligible for the full credit. If it meets only one requirement, it may be eligible for a partial credit of $3,750.
Per the IRS, the requirements below apply to vehicles that are delivered (i.e., “placed in service”) to the taxpayer on and after April 18, 2023.[2]
Battery requirement
To be eligible for the battery portion of the credit (up to $3,750), a certain percentage of the vehicle’s battery must be assembled or manufactured within North America. The percentage thresholds will be as follows:

• 2023: 50%
• 2024: 60%
• 2025: 60%
• 2026: 70%
• 2027: 80%
• 2028: 90%
• 2029 through 2032: 100%

Cars must meet a "critical minerals requirement" to receive the remaining $3,750 portion of the credit. This requirement stipulates that a certain percentage of critical minerals in the car's battery must be extracted or processed within the U.S. or within a country with whom the U.S. has a free-trade agreement. The percentage thresholds will be as follows:

• 2023: 40%
• 2024: 50%
• 2025: 60%
• 2026: 70%
• 2027 through 2032: 80%

Beginning in 2024, vehicles may also not source battery parts from a foreign country of concern (e.g., China). And starting in 2025, EVs cannot contain any critical minerals sourced from a foreign country of concern.

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Hyundai says its first EV plant will open this year to gain the $7,500 tax credit

The first Hyundai plant dedicated to building EVs and batteries in the US will be open as soon as this...

electrek.co

Hyundai says its first EV plant will open this year to gain the $7,500 tax credit​

The first Hyundai plant dedicated to building EVs and batteries in the US will be open as soon as this October. According to Hyundai Motor America CEO Jose Munoz, the brand is “pulling ahead” to gain eligibility for the $7,500 EV tax credit.

Hyundai will open its first EV plant in the US in 2024​

Hyundai began construction on its massive $7.6 billion EV megaplant in Georgia in October 2022. A year later, the company announced that 99.9% of the foundation work was complete as it fast-tracked construction.

The site “is advancing ever day,'” according to Oscar Kwon CEO of the Hyundai Motor Group Metaplant America (HMGMA).

Although Hyundai initially planned to begin construction in early 2023, the company pushed ahead after the Inflation Reduction Act was passed. With a $7,500 tax credit on the line, Hyundai has pulled the timeline forward as quickly as possible.

Munoz told Automotive News that Hyundai is “pulling ahead because everybody knows how important it is” that they don’t qualify for the tax credit.

Despite this, Hyundai Motor (including Kia and Genesis) surged past Ford and GM to become the second largest EV seller in the US, behind only Tesla. A big part of the brand’s success is thanks to a loophole allowing its EVs to qualify for the $7,500 tax credit through leasing.

Hyundai and Kia accounted for around 8% of passenger EVs sold (117,000 units sold) in the US last year, according to BloombergNEF data.

Betting on electric vehicles​

The automaker is gaining ground with dedicated EVs like the IONIQ 5, IONIQ 6, and Kia’s new three-row EV9.

Munoz said EVs produced at the new plant will qualify for the tax credit. “There are a lot of moving pieces, but I am confident very shortly after we start, we will be compliant,” he explained.

The first Hyundai EV plant is expected to open as early as October 2024, three months ahead of schedule. Meanwhile, battery production with LG Energy is slated to begin in January. Hyundai said it will source batteries from other US plants to bridge the gap.

Once up and running, Hyundai’s Metaplant will be able to build 300,000 EVs annually. Hyundai says that it can be expanded to 500,000 if needed.

Six electric models across the Hyundai, Kia, and Genesis brands will be assembled at the facility, including Hyundai’s first three-row electric SUV, the IONIQ 7. Hyundai’s IONIQ 7 is expected to debut this year, with production starting in 2025.

Despite rivals Ford and GM delaying EV initiatives and pulling back on production, Hyundai is keeping its foot on the accelerator.

Munoz mentioned, “IONIQ 5 grew almost 50 percent last year, and IONIQ 6 is getting a good pace. Kona EV also is doing really well.”

Although only a few dealers are still not selling IONIQ EVs, Munoz said, “We are telling them to please hurry up because we are going to continue to bet on electric vehicles.”

Munoz added to ease dealer concerns, Hyundai will add compatibility for Tesla’s NACS by the fourth quarter. Older models will get an adaptor so they can still access the network.

With incentives including a $7,500 special cash offer, the 2024 Hyundai IONIQ 6 undercuts the new Tesla Model 3 by over $9,000. Meanwhile, starting at $32,675, the 2024 Hyundai Kona Electric is one of the most affordable EVs in the US.

Ready to see why buyers are leaning toward Hyundai’s electric models? We can help you score great deals on your next Hyundai EV. Check out our links below for available deals near you.

 

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Treasury, IRS say U.S. consumers saved $1 billion through EV tax credits since January - UPI.com

The Treasury Department and the Internal Revenue Service said on Wednesday that U.S. residents had saved more than $1 billion in buying electric vehicles through federal tax credits since the start of 2024.

www.upi.com

Treasury, IRS say U.S. consumers saved $1 billion through EV tax credits since January​

June 12 (UPI) -- The Treasury Department and the Internal Revenue Service said on Wednesday that U.S. consumers saved more than $1 billion in buying electric vehicles through federal tax credits since the start of 2024.

Federal officials celebrated the $1 billion milestone as a step in reaching clean energy goals. More than 150,000 vehicles were sold through the tax credit program established in the Inflation Reduction Act.

Electric car buyers receive tax credits up to $7,500 and $4,000 for new and used vehicles, respectively, at the point of sale. Officials said those savings continue with charging vehicles rather than using more expensive gasoline.

"President Biden's Inflation Reduction Act is lowering costs for electric vehicle purchases, with more than $1 billion in upfront saving for American consumers since January," Treasury Secretary Janet Yellen said.

"Consumers are saving up front and over time with $1,750 savings on gas and maintenance each year and $21,000 saved over the lifetime of the vehicle."

Federal officials in comparing a set of electric and gas-powered vehicles, the average cost of gasoline over 1,000 miles could cost up to $120 compared to $60 for electric versions.

The savings come after the Treasury and IRS released guidance last year allowing customers to cash in on the tax credit immediately during the sale instead of waiting until they file their annual tax return, which could be months later.

The tax credit program does come with a few exceptions. For example, the credit cannot be applied to vehicles sourced in Russia, China, Iran and North Korea in most circumstances. The Biden administration recently increased tariffs on Chinese EV vehicles, as well.