The information in this article is up to date for tax year 2023 (returns filed in 2024).
Are you in the market for a “green” car? Well, this year brings good news for electric vehicle (EV) buyers. With the updated EV tax credit in 2024, those who purchase an electric vehicle can claim up to $7,500 at the point of sale.
And if you purchased an electric vehicle in 2023, you may be able to claim a credit when you file your taxes.
So what is the EV tax credit and how can you qualify?
Let’s break it down.
What is the EV Tax Credit 2024?
The 2024 EV tax credit, also known as the Clean Vehicle Tax Credit, is a nonrefundable tax credit worth up to $7,500 for taxpayers who purchase a qualifying plug-in or fuel cell electric vehicle (or up to $4,000 for a used EV).
While the potential savings are big, the list of qualifying vehicles is currently limited by the recently expanded requirements under the Inflation Reduction Act (IRA) of 2022. The IRA amended the Clean Vehicle Tax Credit, adding new requirements for vehicle component sourcing and manufacturing in addition to existing income and price thresholds.
While the aim of the EV tax credit is to encourage more people to buy and use electric vehicles, the expanded requirements for vehicles has limited the number of qualifying EVs on the market, so make sure you check before you buy!
Who can claim the EV tax credit?
There are different requirements to claim the EV tax credit in 2024, based on whether you purchase new or used.
New EVs
To qualify for the EV tax credit, buyers must purchase the new electric vehicle for personal use to be used primarily in the U.S. and meet certain income thresholds.
Your modified adjusted gross income (AGI) may not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
Used EVs
To qualify for the used EV tax credit, buyers must:
- Be an individual who bought the vehicle for use and not for resale
- Not be the original owner
- Not be claimed as a dependent on another person’s tax return
- Not have claimed another used clean vehicle credit in the 3 years before the purchase date
Additionally, your AGI* may not exceed:
- $75,000, for single and married filing separately
- $112,500 for heads of households
- $150,000 for married couples filing jointly
*You can use your modified AGI from the year you took delivery of the vehicle or the year before—whichever is less.
What vehicles qualify for the EV tax credit?
If you purchase a new electric vehicle, to qualify for the EV tax credit, your vehicle must:
- Have a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be made by a qualified manufacturer.
- Undergo final assembly in North America
- Meet critical mineral and battery component requirements (as of April 18, 2023).
Additionally, the vehicle’s manufacturer suggested retail price (MSRP) can’t exceed:
- $80,000 for vans, sport utility vehicles and pickup trucks
- $55,000 for other vehicles
For a full list of qualifying new vehicles, visit FuelEconomy.gov, which allows you to filter your search by make, model, year, and time of purchase. (You can also use their searchable list of qualifying used EVs).
EV tax credit amounts
The amount of credit you can claim will depend on when you placed the vehicle in service (which is not necessarily the same as when you purchased it).
Vehicles placed in service January 1 to April 17, 2023
The credit is worth up to $7,500 based on:
- $2,500 base amount
- Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
- Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
Vehicles placed in service on or after April 18, 2023
Vehicles must meet all of the same criteria listed above, plus the new critical mineral and battery component requirements for a credit up to:
- $3,750 if the vehicle meets the critical minerals requirement only
- $3,750 if the vehicle meets the battery components requirement only
- $7,500 if the vehicle meets both
How to claim the EV tax credit in 2024
In 2024, taxpayers can now opt to either claim the credit on their tax returns or transfer the credit to an eligible dealership where they make the purchase. Transferring the credit means the dealership can reduce the purchase by the credit amount or provide you with the equivalent cash amount.
To claim the EV tax credit on your 2024 tax return, you will need to file Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit.
For help determining your eligibility for the EV Tax Credit in 2024 and other available tax credits, e-file with ezTaxReturn. Simple federal returns are FREE to file if you qualify.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
