EV Tax Credit: Rules for New and Used Electric Vehicles
The EV tax credit is a tax break for buying electric vehicles. Here's how much it is, what qualifies and how to claim it.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Updated · 7 min read
Written by
Editor & Content Strategist 
Reviewed by
Certified Financial Planner® 
Edited by
Managing Editor 
Co-written by
Content Management Specialist On this page
-
What is the EV tax credit? -
Which cars qualify for a federal EV tax credit? -
How to qualify for the EV tax credit -
How the electric vehicle tax credit is calculated -
Used EV tax credit qualifications -
How to claim the federal EV tax credit -
What information do you need to claim the EV tax credit? -
EV rebates and incentives -
The bottom line
If you're in the market for a new car this year, there may be some savings in it for you — either upfront or later on.
People who buy electric vehicles (EVs) before September 30, 2025, may be eligible for a tax credit of up to $7,500 for new EVs and up to $4,000 for used EVs. There is no tax credit for EVs purchased after September 30, 2025
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.
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
Which cars qualify for a federal EV tax credit?
Use the tool on the IRS 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.
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 (2025-2026) | $7,500. | $80,000. |
| VISTIQ (2026) | $7,500. | $80,000. |
| Chevrolet | ||
| Blazer EV: LT, RS and SS Models (2024-2026) | $7,500. | $80,000. |
| Equinox EV: LT and RS Models (2024-2026) | $7,500. | $80,000. |
| Silverado EV: LT Model (2025-2026) | $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. |
| Genesis | ||
| Electrified GV70 (2025) | $7,500. | $80,000. |
| GMC | ||
| Sierra EV (2026) | $7,500. | $80,000. |
| Honda | ||
| Prologue (2024-2025) | $7,500. | $80,000. |
| Hyundai | ||
| IONIQ 5 (2025) | $7,500. | $80,000. |
| IONIQ 9 (2026) | $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.
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 have 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
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
FEATURED
ZenBusiness ZenBusiness: Fast & Simple S-Corp
Annual Fee
$0 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.
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%
Critical minerals requirement
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 which the U.S. has a free-trade agreement. The percentage thresholds will be as follows:
- 2023: 40%
- 2024: 50%
- 2025: 60%
- 2026: 70%
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
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
🤓 Nerdy Tip
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
FEATURED
ZenBusiness ZenBusiness: Fast & Simple S-Corp
Annual Fee
$0 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.
If you’re claiming the credit on your tax return...
Sellers must provide taxpayers with a report containing certain information about the vehicle — and this report should be furnished to the taxpayer by the date of the vehicle’s purchase. Make sure it includes the following:
- 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 VIN, or vehicle identification number.
- The 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
.
If you’re transferring the credit to the dealer...
If you’re electing to transfer the credit to the dealer for a direct discount, you must disclose your taxpayer identification number — typically your Social Security number — and a photo ID at the time of purchase:
You must also officially attest to, or confirm, the following information:
- Your modified adjusted gross income (MAGI) falls within the eligibility threshold.
- You understand that you must repay the IRS any rebate amount you accepted if your MAGI was above the accepted limits.
- The car will be primarily for personal use.
- You will file a tax return for the tax year in which you bought the car and provide the vehicle’s identification number and the date of the transfer election to the IRS.
- You elected to voluntarily transfer the credit
.
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
Article sources
NerdWallet writers are subject matter authorities who use primary,
trustworthy sources to inform their work, including peer-reviewed
studies, government websites, academic research and interviews with
industry experts. All content is fact-checked for accuracy,
timeliness and relevance. You can learn more about NerdWallet's
high standards for journalism by reading our
editorial guidelines.
-
1. -
2. -
3. -
4. -
5. -
6. -
3. -
3. -
9. -
3. -
3.
On this page
-
What is the EV tax credit? -
Which cars qualify for a federal EV tax credit? -
How to qualify for the EV tax credit -
How the electric vehicle tax credit is calculated -
Used EV tax credit qualifications -
How to claim the federal EV tax credit -
What information do you need to claim the EV tax credit? -
EV rebates and incentives -
The bottom line
AD Advertisement
Get matched to a financial advisor for free with NerdWallet Advisors Match. Find an advisor for free
AD Advertisement
Get matched to a financial advisor for free with NerdWallet Advisors Match. Get started
AD Advertisement