EV Tax Credit: Rules for New and Used Electric Vehicles
The EV tax credit is a federal tax benefit for those who purchase qualifying new or used electric vehicles. Here's how much it's worth, which cars qualify and how to claim it.
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If you're in the market for an electric vehicle (EV) this year, there may be some savings in it for you — either upfront or later on.
People who buy new electric vehicles may be eligible for a tax credit of up to $7,500, and used electric car buyers may qualify for up to $4,000. Consumers can either choose to claim the credit on their taxes or opt to transfer the credit to an eligible dealer for an immediate discount on the vehicle at purchase.
↓ Jump to: Cars that may qualify for the 2025 credit.
What is the EV tax credit?
The EV tax credit is a nonrefundable tax credit offered to taxpayers who purchase qualifying electric vehicles or plug-in hybrid vehicles. To qualify, 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.
As of 2024, taxpayers can choose to transfer the tax credit to an eligible dealership instead of claiming it on their tax returns the following year. This allows the dealer to lower the cost of the vehicle by the corresponding credit amount for an immediate point-of-sale discount.
EV tax credit news updates
Jan. 20: President Trump seeks rollbacks
Though President Donald Trump signed an executive order that seeks to roll back EV policies, there has been no change to the EV tax credit at this time. This article will be updated as more information becomes available.
April 1: IRS fixes credit-claiming issues
Some taxpayers seeking to redeem the EV tax credit on their 2024 returns may have run into issues claiming the credit if their dealerships didn't submit certain paperwork to the IRS on time. According to the National Automobile Dealers Association, the agency has reopened its Energy Credits Online portal so dealerships can resubmit seller's reports. Speak to your dealer for more information.
Which cars qualify for a federal EV tax credit?
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 cautions, because some versions of the cars below may not qualify
As of April 2025, 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, 2025.
Cars eligible for a 2025 EV tax credit
Car Make and Model | Tax Credit Amount | MSRP Limit |
|---|---|---|
Acura | ||
ZDX (2024-2025) | $7,500. | $80,000. |
Cadillac | ||
LYRIQ: Luxury, Sport and V-Series Models (2024-2026) | $7,500. | $80,000. |
OPTIQ (2025) | $7,500. | $80,000. |
VISTIQ (2026) | $7,500. | $80,000. |
Chevrolet | ||
Blazer EV: LT, RS and SS Models (2024-2025) | $7,500. | $80,000. |
Equinox EV: LT and RS Models (2024-2025) | $7,500. | $80,000. |
Silverado EV: LT Model (2025) | $7,500. | $80,000. |
Chrysler | ||
Pacifica PHEV (2024-2025) | $7,500. | $80,000. |
Ford | ||
F-150 Lightning: FLASH Trim (2024-2025) | $7,500. | $80,000. |
F-150 Lightning: LARIAT and XLT Trim (2023–2025) | $7,500. | $80,000. |
Honda | ||
Prologue (2024-2025) | $7,500. | $80,000. |
Jeep | ||
Wagoneer S (2025) | $7,500. | $80,000. |
Kia | ||
EV6 (2025) | $7,500. | $80,000. |
EV9 (2026) | $7,500. | $80,000. |
Tesla | ||
Cybertruck: Single and Dual Motor; Long Range (2025) | $7,500. | $80,000. |
Model 3 Long Range: AWD and RWD (2025) | $7,500. | $55,000. |
Model 3 Performance (2025) | $7,500. | $55,000. |
Model X AWD (2025) | $7,500. | $80,000. |
Model Y Long Range: AWD (2025-2026) and RWD (2025) | $7,500. | $80,000. |
Model Y Performance, Long Range RWD (2025); Long Range AWD (2025-2026) | $7,500. | $80,000. |
» Crunch the numbers with NerdWallet's auto loan calculator.
Vehicles delivered in 2024: If your vehicle was delivered from Jan. 1, 2024, to Dec. 31, 2024, and you plan to claim it on your 2025 taxes, click on the table below to review which cars qualified for the tax credit.
How to qualify for the EV tax credit
Vehicle price cap
Cars must meet a certain price point to qualify for the credit.
Vans, SUVs and pickup trucks: $80,000 or less.
Sedans and passenger cars: $55,000 or less.
Used: $25,000 or less.
The limits above refer to the manufacturer's suggested retail price (MSRP). 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.
EV tax credit income limits
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. 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.
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.
5.0
NerdWallet rating- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
How the electric vehicle tax credit is calculated
The full tax credit, worth up to $7,500, consists 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.
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:
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.
» Curious about other tax incentives for going green? How the solar tax credit works
How to claim the federal EV tax credit in 2024-2025
Option 1: How to claim the clean vehicle tax credit on your taxes
To claim the credit, you can file Form 8936 when you file your federal income taxes. The credit is nonrefundable, which means it can lower or eliminate your tax liability, but you won't get any overage of the credit refunded once your liability hits zero. You also won't be able to carry over any excess amount to offset future taxes.
Note: According to the agency, you generally can only claim the clean vehicle tax credit for the tax year the vehicle was delivered to you, not necessarily the year it was purchased. This means, for example, that if you bought a qualifying EV in 2024 and it was delivered that same year, you must claim the credit on your 2024 tax return (filed in 2025). However, if you purchased a qualifying EV in 2024 but it was not delivered until 2025, you must claim it on your 2025 return (taxes filed in 2026).
Option 2: How to transfer the clean vehicle tax credit to a dealer
Taxpayers who transfer the credit to the dealership get an immediate discount on the car rather than having to wait to claim a credit on their taxes. Although the discount has no effect on your tax bill, you still have to report the transaction on your tax return.
You’ll need to fill out Form 8936 when you file your return for that year to report on your election and provide the agency with your VIN. And buyer beware — if you take a rebate but your income exceeds the AGI limitations, you’ll be required to pay the IRS back.
5.0
NerdWallet rating- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
What information do you need to claim the EV tax credit?
Before you leave a dealership with a new EV, make sure you have certain documents that you’ll need to claim the credit or report the purchase on your taxes.
EV rebates and incentives
With all the focus on credits, it’s important to know about additional incentives on the state and local levels. California’s Clean Air Vehicle program, for example, grants carpool lane access to select electric vehicles. And New Yorkers might be eligible for a state-level rebate of up to $2,000 on top of the federal tax credit.
Make sure you’re aware of any restrictions that come with applying for multiple incentives, though. Some states may not allow you to “double-dip” or claim a state-level rebate on top of a federal one.
Do you qualify for the EV tax credit if you lease?
Although individual consumers can’t claim the EV tax credit when leasing an EV, they might still see some trickle-down savings passed down from the dealer if they choose to lease.
Some businesses (i.e., dealerships and leasing agencies) may qualify for another type of tax credit called the commercial vehicle tax credit. The commercial credit is far less restrictive than the clean vehicle credit available to individual taxpayers. It allows businesses to claim tax breaks for a wider range of eligible electric vehicles, including ones that were not manufactured in the U.S.
Even though the dealership gets the tax credit for purchasing the car, the potential benefit to individual consumers here is that the dealer can, in theory, then pass down the savings by lowering the leasing cost by the credit amount.
A word of caution for potential lessees, though: Just because the dealership could pass those savings onto you doesn’t mean it will. Dealers aren’t required to give customers a discount on their leases, so it may require some negotiating on your end.
Assessing the transparency of any deal that claims the savings are being passed down may also require research and shopping around to ensure you’re getting the best deal. Plus, there are other factors about leasing that you may want to take into account.
The bottom line
The clean vehicle credit expansion is exciting news for taxpayers looking to go green, but it still remains fairly complicated and nuanced — especially given the murk surrounding the new sourcing requirements that are set to adjust each year. If you’re confused about your eligibility or want guidance for your personal situation, consider consulting a qualified tax professional, such as a CPA or a tax preparer, before you sign on the dotted line.
» MORE: How to find a CPA near you
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