2023 Electric Vehicle Tax Credit Rules Simplified: See Which Cars Qualify

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On August 16, 2022, President Joe Biden signed The Inflation Reduction Act of 2022, which makes buying an electric vehicle a little less expensive with tax credits that should save drivers $950 a year. Eligible are plug-in electric and other “clean” vehicles. Not only are there federal and state rebates, you may also find a third-party offering rebates on vehicles and chargers. Keep reading to see if you are eligible for a tax credit and other rebates this year. (6)
How Much Is the EV Tax Credit and Who Qualifies?
The EV tax credit ranges from $2,500 to $7,500 for new cars (depending on battery capacity) and up to $4,000, limited to 30% of the sale price, for used EVs. Eligibility depends on the vehicle’s weight, the number of cars the manufacturer has sold and whether you own the car.
- You must own the car. Leased cars don’t qualify.
- The car must weigh less than 14,000 pounds.
- A new clean vehicle is a clean vehicle bought on or after January 1, 2023. (7)
- The credit is nonrefundable, meaning iit can lower your tax bill to zero, but you won’t get a cash refund.
- To claim the credit, taxpayers must file Form 8936 on their federal income taxes.
- If you expect to receive a car purchased with a written binding contract after the tax-filing deadline, you'll need to submit an amended return to claim the credit once the car is delivered.
- You can only claim one credit per vehicle.
- Manufacturing caps will be lifted so cars like Tesla and GM, which sold more than 200,000 qualifying vehicles are now eligible.
- The tax credit can only be claimed once every three years.
- Taxpayers with eligible cars can claim credit from 2023 to 2032. Taxpayers can only claim one credit per vehicle.
- Vans, SUVs and pickup trucks must have an MSRP of $80,000 and under. The cap does not include taxes and dealership fees.
- Sedans, coups and other passenger cars are capped at $55,000. The cap does not include taxes and dealership fees.
- Vehicle cannot be acquired for resale.
On Used Cars
- Clean vehicles purchased and delivered from Aug. 17, 2022, to Dec. 31, 2022 must have had their final assembly in North America to be eligible. See this list for qualifying cars.
- The used car must be a plug-in electric or fuel cell. (5)
- Only the first transfer of a vehicle qualifies for the tax credit.
- Purchase price of a used car must be $25,000 or less. (5)
- A used car model must be at least two years old. (5)
Income Eligibility Caps on EV Tax Credits
You are not eligible if your income is higher than the modified adjusted gross income levels listed below. (2)
Tax Filing Status | Modified Adjusted Gross Income (New Car) | Modified Adjusted Gross Income (Used Car) |
---|---|---|
Single | $150,000 | $75,000 |
Head of Household | $225,000 | $112,500 |
Married, Filing Jointly | $300,000 | $150,000 |
Married, Filing Separately | $150,000 | $75,000 |
Battery Requirements for Tax Credit Eligibility
To be eligible for up to $3,750, a certain percentage of the vehicle’s battery must be assembled or manufactured within North America. The percentage thresholds are:
- 2023: 50%
- 2024: 60%
- 2025: 60%
- 2026: 70%
- 2027: 80%
- 2028: 90%
- 2029 through 2032: 100%
Critical Minerals Requirements for Tax Credit Eligibility
To be eligible for the remaining $3,750 portion of the tax credit, the following 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.
- 2023: 40%
- 2024: 50%
- 2025: 60%
- 2026: 70%
- 2027 through 2032: 80%
*Note: If the EV was purchased and delivered before April 18, 2023, the critical minerals and battery sourcing requirements do not apply. The tax credit will be calculated as $2,500 if the battery has at least a 7-kilowatt-hour capacity and up to $5,000 for additional kilowatt hours.
Information Needed To Claim Tax Credit
You must get this information from the seller:
- Name and taxpayer identification number (TIN) of the seller.
- Name and TIN of the taxpayer.
- Date of sale and sales price.
- Verification of the maximum tax credit the vehicle is eligible for.
- The clean vehicle’s VIN, or vehicle identification number.
- The clean vehicle’s battery capacity.
- Verification that the taxpayer is the original user of the vehicle.
- A statement of declaration from the seller under penalty of perjury.
Federal Tax Credit By Vehicle Make/Model and Year for Vehicles Purchased in 2023+
Make/Model | Year | Vehicle Type | Credit | MSRP Limit |
---|---|---|---|---|
Audi Q5 TFSI e Quattro | 2023 | PHEV | $7,500 | $80,000 |
BMW 330e | 2021-2023 | PHEV | $5,836 | $55,000 |
BMW X5 xDrive45e | 2021-2023 | PHEV | $7,500 | $80,000 |
Cadillac Lyriq | 2022-2024 | EV | $7,500 | $80,000 |
Chevrolet Bolt | 2022-2023 | EV | $7,500 | $55,000 (check VIN for eligibility) |
Chevrolet Bolt EUV | 2022-2023 | EV | $7,500 | $55,000 |
Chevrolet Silverado EV | 2024 | EV | $7,500 | $80,000 |
Chrysler Pacifica | 2022-2023 | PHEV | $7,500 | $80,000 |
Ford E-Transit | 2022-2023 | EV | $7,500 | $80,000 |
Ford Escape Plug-In Hybrid | 2022-2023 | PHEV | $6,843 | $80,000 |
Ford F-150 Lightning | 2022-2023 | EV | $7,500 | $80,000 |
Ford Mustang Mach-E | 2022-2023 | EV | $7,500 | $80,000 |
Genesis Electrified GV70 | 2023-2024 | EV | $7,500 | $80.000 |
Jeep Grand Cherokee 4xe | 2022-2023 | PHEV | $7,500 | $80,000 |
Jeep Wrangler 4xe | 2022-2023 | PHEV | $7,500 | $80,000 |
Lincoln Aviator Grand Touring | 2022-2023 | PHEV | $6,534 | $80,000 |
Lincoln Corsair Grand Touring | 2022-2023 | PHEV | $6,843 | $80,000 |
Nissan Leaf S | 2021-2023 | EV | $7500 | $55,000 |
Nissan Leaf S Plus | 2021-2023 | EV | $7,500 | $55,000 |
Nissan Leaf SL Plus | 2021-2023 | EV | $7,500 | $55,000 |
Nissan Leaf SV | 2021-2023 | EV | $7,500 | $55,000 |
Nissan Leaf SV Plus | 2021-2023 | EV | $7,500 | $55,000 |
Rivian R1S | 2022-2023 | EV | $7,500 | $80,000 |
Rivian R1T | 2022-2023 | EV | $7,500 | $80,000 |
Tesla Model 3 Long Range | 2022-2023 | EV | $7,500 | $55,000 |
Tesla Model 3 Performance | 2022-2023 | EV | $7,500 | $55,000 |
Tesla Model 3 RWD | 2022-2023 | EV | $7,500 | $55,000 |
Tesla Model Y All-Wheel Drive | 2022-2023 | EV | $7,500 | $80,000 |
Tesla Model Y Long Range | 2022-2023 | EV | $7,500 | $80,000 |
Tesla Model Y Performance | 2022-2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volkswagen | 2023 | EV | $7,500 | $80,000 |
Volvo | 2022 | PHEV | $5,419 | $55,000 |
Volvo | 2022 | PHEV | $7,500 | $55,000 |
Volvo | 2022 | PHEV | $7,500 | $55,000 |
*Compiled from the U.S. Dept of Energy website (1)
EV State Tax Credit
In addition to a federal tax credit, you may get a state tax credit, depending on where you live.
Program |
Description |
|
Alabama |
None |
|
Alaska |
None |
|
Arizona |
None |
|
Arkansas |
None |
|
California |
Buy or lease an EV & get $1,000-$7,500 |
|
The District is currently accepting applications for its Drive Clean! Rebate Program which provides rebates to Valley residents and businesses for the purchase or lease of new, clean-air vehicles. To be considered for a rebate, applicants must purchase or lease a vehicle from the eligible vehicle list. For more information about the program, please review the program guidelines and application. Maximum Rebate: Up to $3,000 depending on the vehicle purchased. |
||
Colorado |
See table on page 2 | |
Connecticut |
Connecticut Hydrogen and Electric Automobile Purchase Rebate Program (CHEAPR) |
Incentive amounts currently range from $4,250 for an eligible new battery electric (BEV), $2,250 for a plug-in hybrid electric (PHEV), and up to $9,500 for a fuel cell electric vehicle (FCEV) when a Standard Rebate is combined with Rebate+ New for Rebate+ qualified individuals. |
Delaware |
New Battery Electric Vehicles (including vehicles with gasoline range extenders)*: $2,500 New Plug-in Hybrid Electric Vehicles*: $1,000 *Note: To be eligible for a rebate, the total vehicle price, including any destination, documentation and order fees, cannot exceed $60,000. The total vehicle price is the final purchase price including added features, equipment and extended warranties. Taxes, tags, rebates, incentives, and trade-ins are not included as part of the total vehicle price. |
|
DC |
None |
|
Florida |
None |
|
Georgia |
None |
|
Hawaii |
None |
|
Idaho |
None |
|
Illinois |
A rebate application cycle is not currently open.
|
|
Indiana |
None |
|
Iowa |
None |
|
Kansas |
Kansas' National Electric Vehicle Infrastructure (NEVI) Planning |
An income tax credit is available for 40% of the incremental or conversion cost for qualified AFVs, based on gross vehicle weight rating (GVWR) as outlined in the following table: (Ranges from $2,400 to $40,000) |
Kentucky |
None |
|
Louisiana |
None |
|
Maine |
Varies by income and EV See table on link |
|
Maryland |
Please be advised, funding for the one-time excise tax credit for a qualifying plug-in electric or fuel electric vehicle will be available as of July 1, 2023 (Fiscal Year 2024) You may be eligible for a one-time excise tax credit, up to $3,000, when you purchase a qualifying zero-emission plug-in electric or fuel cell electric vehicle. |
|
Massachusetts |
For MOR-EV applications submitted on or after November 10, 2022, for vehicles purchased or leased prior to that date, rebates for eligible battery electric or fuel cell vehicles with a sales price of $50,000 or less will be $3,500. Eligible battery electric or fuel cell vehicles with a sales price of $55,000 or less and with a purchase or lease date on or after November 10, 2022 may qualify for the $3500 rebate. |
|
Michigan |
None |
|
Minnesota |
The Minnesota Department of Transportation is piloting a three-year program to give a one-time MnPass account credit to eligible EV drivers for use in MnPass toll lanes. Drivers who purchase or lease a new or used plug-in hybrid electric vehicle receive a $125 credit or a $250 credit for an all-electric vehicle. Eligible vehicles must be purchased or leased between November 1, 2019, and October 31, 2022. For more information, visit the MnPass website. |
|
Mississippi |
None |
|
Missouri |
None |
|
Montana |
None |
|
Nebraska |
None |
|
Nevada |
None |
|
New Hampshire |
None |
|
New Jersey |
Charge Up New Jersey promotes clean vehicle adoption in the state by offering incentives of up to $4,000 for the purchase or lease of new, eligible battery electric vehicles. The vehicle must be ordered, purchased or leased after 07/25/22, the launch of the point-of-sale program; |
|
New Mexico |
None | None |
New York |
The Charge NY initiative offers electric car buyers the Drive Clean Rebate of up to $2,000 for new car purchases or leases. |
|
North Carolina |
None |
|
North Dakota |
None |
|
Ohio |
None |
|
Oklahoma |
For tax years beginning before December 31, 2028, a one-time income tax credit is available for up to $50,000 towards the cost of purchasing a new original equipment manufacturer AFV or converting a vehicle to operate on an alternative fuel. Tax credit amounts vary depending in the gross vehicle weight rating (GVWR) of the vehicle: (click link to see table) The state also provides a tax credit of 10% of the total vehicle cost, up to $1,500, if the incremental cost of a new AFV cannot be determined or when an AFV is resold, as long as a tax credit has not been previously taken on the vehicle. Equipment used for conversions must be new, not previously used to modify or retrofit any vehicle, meet applicable federal and state safety standards, and must be installed by a state certified alternative fuels equipment technician. Eligible alternative fuels include natural gas, propane, and hydrogen. Tax credits may be carried forward for up to five years. |
|
Oregon |
Rebate amount: $750 for zero emission motorcycles $1,500 for battery under 10 kWh $2,500 for battery of 10 kWh or more |
|
Pennsylvania |
$2,000 rebate for a Battery Electric Vehicle (BEV). $1,500 rebate for a Plug-In Hybrid Electric Vehicle (PHEV). Extra $1,000 rebate may be available based on household size and income |
|
Rhode Island |
Driving Rhode Island to Vehicle Electrification (DRIVE EV) rebate |
rebates of up to $2,500.00 for the purchase or lease of new battery electric vehicles and fuel-cell electric vehicles and up to $1,500.00 for new plug-in hybrid electric vehicles. The program also offers rebates of up to $1,500.00 for the purchase or lease of used battery electric vehicles and fuel-cell electric vehicles and up to $750.00 for used plug-in hybrid electric vehicles. |
South Carolina |
None |
|
South Dakota |
None |
|
Tennessee |
None |
|
Texas |
CURRENT CLOSED AND NOT ACCEPTING AN APPLICATIONS |
|
Utah |
||
Vermont |
$1,500 to $4,000 for eligible purchases of new EVs, up to $5,000 for used high-efficiency vehicles. Additional $3,000 available with the Replace Your Ride program. |
|
Virginia |
NEW Beginning January 1, 2022, a resident of the Commonwealth who purchases a new electric motor vehicle from a participating dealer shall be eligible for a rebate of $2,500. A qualified resident of the Commonwealth who purchases such vehicle shall also be eligible for an additional $2,000 enhanced rebate. USED Beginning January 1, 2022, a resident of the Commonwealth who purchases a used electric motor vehicle from a participating dealer with a sale price as provided by § 58.1-2401 of not more than $25,000 shall be eligible for a rebate of $2,500. A qualified resident of the Commonwealth who purchases such vehicle shall also be eligible for an additional $2,000 enhanced rebate. |
|
Washington |
Alternative Fuel Vehicle (AFV) Retail Sales and Use Tax Exemption |
The sale or lease of new or used passenger vehicles, light-duty trucks, and medium-duty passenger AFVs is exempt from the state retail sales and use tax. To be eligible, new vehicles may not be valued above $45,000 and used vehicles may not be valued above $30,000. |
West Virginia |
None |
|
Wisconsin |
None |
|
Wyoming |
None |
*State Level Rebates. (3)
Rebates from Private Companies and Other Third Parties
In states that don’t offer a tax rebate, private companies and other third parties may offer a rebate for EV purchases and rebates for chargers. See what rebates there are in your state by doing a quick Google Search for EV Rebates in (fill in the blank with your state). Go deeper into your search than government-issues rebates.
In California, alone, there are many local rebate offers, too many to list here. Check out a few examples of rebates in other states below:
Electric Vehicle (EV) Rebate – Alaska Power and Telephone (AP&T)
AP&T offers a rebate of $1,000 to residential customers who own a new or pre-owned EV, including electric motorcycles, with a minimum battery size of at least 16 kilowatts.
Electric Vehicle (EV) Rebate - Nevada Energy (NV Energy)
NV Energy offers low-income customers a $2,500 rebate for the purchase of a new or used EV. Eligible low-income customers are households with income levels equal to or below 200% of the federal poverty line. Rebates are awarded on a first-come, first-served basis. For more information, see the NV Energy Electric Vehicles website.
Electric Vehicle (EV) Rebates - New Hampshire Electric Co-op (NHEC)
NHEC offers residential customers a rebate of $1,000 for the purchase or lease of a new or used electric vehicle, $600 for the purchase or lease of a new or pre-owned plug-in hybrid electric vehicle, and $300 for the purchase or lease of a new or pre-owned electric motorcycle. EVs must be purchased or leased between January 1, 2022, and December 31, 2022.
Not only can you get an amazing rebate, you can also spend less on car insurance. If you haven’t shopped around to see what rates are available to you in the past six months, you’re probably paying hundreds more than you need to each year. Get free car insurance quotes by entering your zip code on this page and answering a few easy questions.
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