The US Treasury finally released the updated list of electric vehicles that qualify for the federal tax credit of up to $7,500 under the Inflation Reduction Act.
Sadly, fewer than a dozen EVs were found to adhere to the US’s stringent battery component and mineral requirements. Interestingly, all of these eligible EVs are from US-based brands.
Revisions
The credits for new clean vehicles purchase changed with the addition of income limits, price caps, and other requirements.
The IRA also divided the tax credit into two parts:
- $3,750 eligibility if 50% of the battery’s components are produced or assembled in North America
- $3,750 eligibility if at least 40% of the critical minerals, such as graphite, lithium, and cobalt, are sourced from the US or a trading partner
Apart from that, the IRA implemented many significant changes to the tax credit:
- The production threshold that excluded automakers who produced more than 200,000 EVs has been dropped.
- The manufacturer’s suggested retail price (MSRP) for passenger cars must be $55,000 or less. The cap is $80,000 for vans, SUVs, and light vehicles.
- The credit will be made available as “cash on the hood” at the time of sale beginning in 2024, allowing you to use it to reduce the cost of your vehicle.
- Beginning the next year, vehicles that use battery parts from “a foreign entity of concern” (China and Russia) will not be eligible for any credits. The deadline is 2025 for critical minerals.
The adjusted gross income required to be eligible for the credit has also been capped:
| Filing status | Income |
| Single | $150,000 |
| Head of household | $225,000 |
| Married, filing jointly | $300,000 |
| Married, filing separately | $150,000 |
The majority of these modifications went into effect on January 1, 2023, and they will continue to do so until January 1, 2032. For updates, always visit the IRS website.
Which models are currently qualified?
For starters, the buyer must receive the EV on or after April 18, 2023, to have a chance to qualify for the federal tax credits.
The battery component requirements mentioned above rise every year to gradually achieve the US 2029 target of 100%. Meanwhile, the critical mineral requirements will gradually increase to a maximum of 80% by 2027.
The models listed below are still eligible under the new rules, which are in place until December 31, 2032:
- 2022-2023 Chrysler Pacifica PHEV
- 2022-2023 Chevrolet Bolt
- 2022-2023 Chevrolet Bolt EUV
- 2023-2024 Cadillac LYRIQ
- 2024 Chevrolet Silverado
- 2024 Chevrolet Blazer
- 2024 Chevrolet Equinox
- 2022-2023 Tesla Model 3 Performance
- 2022-2023 Tesla Model Y AWD
- 2022-2023 Tesla Model Y Long Range AWD
- 2022 Tesla Model Y Performance
On the other hand, below are the models that only qualified for 50% of the federal tax credit:
- 2022 Ford e-Transit
- 2022 Ford Escape Plug-in Hybrid
- 2022-2023 Ford F-150 Lightning (standard and extended range)
- 2022-2023 Ford Mustang Mach-E (standard and extended range)
- 2022-2023 Jeep Grand Cherokee PHEV 4xe
- 2022-2023 Jeep Wrangler PHEV 4xe
- 2023 Lincoln Aviator Grand Touring
- 2022 Lincoln Corsair Grand Touring
- 2022-2023 Tesla Model 3 Standard Range RWD
The Treasury Department indicated in a statement that “some qualified manufacturers have yet to submit information,” so the lists will probably expand.
Unfortunately, some models that were initially eligible for the tax credit are now disqualified from the updated list. Nonetheless, the following models can still claim their credits if they are “received” on or before April 17, 2023:
- Audi Q5 TFSI e Quattro
- BMW 330e
- BMW X5 xDrive45e
- Genesis Electrified GV70
- Nissan Leaf S, S Plus, SL Plus, SV and SV Plus
- Rivian R1S
- Rivian R1T
- Volkswagen ID.4 (VW had expected to qualify for at least one credit)
- Volvo S60 (PHEV), Extended Range, and T8 Recharge (Extended Range)
For updates, visit the fuel economy webpage of the Department of Energy.
Approved 2022 vehicles
The US Treasury requires that an EV must have been purchased before January 1, 2023, be for personal use, and be operated largely in the US in order to be eligible for the credit on the 2022 tax return.
Additionally, it needs to be capable of being charged externally and have a gross vehicle weight rating below 14,000 pounds. The EV must also have undergone final assembly in North America if purchased between August 17 and December 31, 2022.
The IRS states that if you “entered into a written binding contract” after December 31, 2021, but before August 17, 2022, you are exempt from the final assembly requirement.
The Department of Energy’s Alternative Fuels Data Center website provides the list of 2022 EVs that have been approved for the federal tax credit:
- Audi Q5
- BMW 330e
- BMW X5 xDrive45e (PHEV)
- Chevrolet Bolt EUV
- Chevrolet Bolt EV
- Chrysler Pacifica PHEV
- Ford E-Transit
- Ford Escape PHEV
- Ford F-150 Lightning
- Ford Mustang MACH E
- GMC Hummer EV Pickup
- GMC Hummer EV SUV
- Jeep Grand Cherokee 4xe
- Jeep Wrangler 4xe
- Lincoln Aviator PHEV
- Lincoln Corsair PHEV
- Lucid Air
- Nissan Leaf
- Rivian EDV
- Rivian R1S
- Rivian R1T
- Tesla Model 3
- Tesla Model S
- Tesla Model X
- Tesla Model Y
- Volvo S60 Recharge
Notably, you might be able to claim the credit if you bought an EV in a prior year but failed to claim it by filing an updated return for the tax year in which you gained possession.
Qualified EVs purchased before April 18, 2023
According to the IRS, these makes, and models are eligible for the credit if they were purchased between January 1 and April 17, 2023:
All-electric vehicles
| 2023 | BMW 330e |
| 2023 | BMW X5 xDrive45e (PHEV) |
| 2023 | Cadillac Lyriq |
| 2023 | Chevrolet Bolt EV |
| 2023 | Ford E-Transit |
| 2023 | Jeep Grand Cherokee 4xe |
| 2023 | Jeep Wrangler 4xe |
| 2023 | Lincoln Aviator PHEV |
| 2023 | Lincoln Corsair Grand Touring |
| 2023 | Mercedes EQS SUV |
| 2023 | Nissan Leaf |
| 2023 | Rivian R1S |
| 2023 | Rivian R1T |
| 2023 | Tesla Model 3 |
| 2023 | Tesla Model S |
| 2023 | Tesla Model X |
| 2023 | Tesla Model Y |
| 2023 | Volkswagen ID.4 |
Plug-in hybrids
| 2023 | Audi Q5 TFSI Quattro |
| 2023 | BMW 330e |
| 2023 | BMW X5 xDrive45e |
| 2023 | Chrysler Pacifica |
| 2023 | Ford Escape |
| 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 |
Tax credits for used EVs
Used plug-in electrics or fuel-cell EVs can be eligible for a credit of up to 30% of the purchase price, with a maximum of $4,000, starting in 2023.
There are some limitations:
- A car may only be eligible for the used EV tax credit once. Future owners won’t be qualified.
- The vehicle must have an MSRP of $25,000 or less.
- It must be at least a two-year-old vehicle. It must be from the 2021 or previous model year if you purchased it in 2023.
- Used cars bought prior to 2023 are ineligible.
- The car must have been bought from a licensed dealer who informs the IRS of the transaction.
- Other than that, the car has to qualify for EV credit.
The income limits for used EV owners who want to apply for the credit are listed below:
| Filing status | Modified adjusted gross income |
| Single | $75,000 |
| Head of household | $112,500 |
| Married, filing jointly | $150,000 |
| Married, filing separately | $75,000 |
How to claim the EV tax credit?
You must submit IRS Form 8936 with your 2022 tax return to claim the credit for an EV you acquired in 2022. (You will have to provide your car’s VIN.)
Tax credits for EV charger installation
The tax credit for home charging systems was also extended by the Inflation Reduction Act to 2032 and made effective on January 1, 2022. The tax credit amounts to $1,000 or, if less, 30% of the price of purchasing or installing the system.
Now, equipment used for bidirectional charging is also eligible for credit. With this technology, you may use your EV to power other devices or even your house. Although not many devices have the feature, it can be useful in emergencies or other situations.
You must submit IRS Form 8911 in order to claim the Alternative Fuel Vehicle Refueling Property Credit.
See Also:
- 6 EV-makers disqualified from tax credit of up to $7,500 due to new battery sourcing requirements
- Tesla alerts customers that the $7,500 tax credit for the Model 3 RWD will drop
- Audi may develop its first EV production plant in US, to qualify for the federal tax credits
- The 30C Tax Credit: What US businesses need to know
- All Tesla Model Y variants are now eligible for the $7,500 EV tax credit with a new $80,000 price limit
If you are interested in buying an electric vehicle, you need to be aware of these requirement changes and updates.
