2024 EV Tax Credit: Big Rebate, Small List


Claiming the federal government's $7,500 tax credit on electric vehicle purchases has never been easier. But let's address the elephant in the room. At this time, not many EVs are eligible for full or partial credit.

Although the discount is significant, it only applies to electric vehicles that meet certain requirements, primarily regarding battery material sourcing and manufacturing.

Yes, the list of eligible EVs has shrunk significantly in 2024 due to stricter requirements. But experts are optimistic.

“I'm expecting this [list] “It's going to increase over time,” said Kate Whitefoot, an associate professor of engineering and public policy at Carnegie Mellon University. That's because it will take time for automakers to build the domestic battery and mineral supply chains needed to meet tax credit requirements. These are still relatively new, she said.

Some experts think you shouldn't wait until the list grows. If you want an EV now, there's no need to wait for more vehicles to qualify, says Peter Glen, founder and co-CEO of EV finance platform EV Life. “Electric cars are like savings accounts on wheels,” he said, adding that economic conditions are already good for buyers in the market at the moment.

So how do you know which EVs are eligible for credit and which are not?

Thankfully, the government maintains a running list, which we explain in more detail below. However, it is still important to understand the “why” behind the rules. Here's a breakdown of how the tax credit works and what you can expect.

2021 Tesla Model Y
CNET

Starting at $45,380, the 2023 Tesla Model Y offers a great balance of range and efficiency. Factor in up to $7,500 in federal tax credits and qualifying state EV incentives, making it less expensive than some internal combustion engine sedans in its class. Shoppers with a little more room on their budget can choose to upgrade to the longer range and more powerful dual-motor version, but 260 miles with this configuration is more than enough for daily year-round driving and occasional road trips. is enough.

How the EV tax credit works

Until last year, the EV tax credit worked like most other schemes. After purchasing the EV at list price, he claimed a $7,500 tax credit after the fact and received a discount at tax time. That means customers will have to pay the full amount for the EV upfront and receive the rebate a few months later.

But thanks to recent rule changes, participating car dealers can now apply discounts at the point of sale. This means customers now see a discount on the sticker price and don't have to submit documentation later.

New electric vehicles qualify for a full $7,500 credit or a partial $3,750 credit (we'll explain why later). Also worth mentioning. There is a similar tax credit of up to $4,000 for used electric vehicles.

All EVs currently eligible for federal tax credits

Due to stricter eligibility requirements in 2024, the list of eligible EVs has been reduced. Federal regulations set out several important criteria that EVs must meet to qualify for the credit. Some of these relate to typical income and price limits, while others relate to where EV batteries are manufactured and where the materials come from.

Here is the latest list of eligible EVs purchased after January 1, 2024:

EV make, model, year

Tax credit amount

Manufacturer's Suggested Retail Price Limits

Chevrolet, Bolt EUV (2022-2023)

$7,500

$55,000

Chevrolet, Bolt EV (2022-2023)

$7,500

$55,000

Ford, F-150 Lightning: Extended range battery (2022-2024)

$7,500

$80,000

Ford, F-150 Lightning: Standard Range Battery (2022-2024)

$7,500

$80,000

Rivian, R1S Dual Large (2023-2024)

$3,750

$80,000

Rivian, R1S Quad Large (2023-2024)

$3,750

$80,000

Rivian, R1T Dual Large (2023-2024)

$3,750

$80,000

Rivian, R1T Dual Max (2023-2024)

$3,750

$80,000

Rivian, R1T Quad Large (2023-2024)

$3,750

$80,000

Tesla, Model 3 performance (2023-2024)

$7,500

$55,000

Tesla, Model X Long Range (2023-2024)

$7,500

$80,000

Tesla, Model Y All-Wheel Drive (2023-2024)

$7,500

$80,000

Tesla, Model Y performance (2023-2024)

$7,500

$80,000

Tesla, Model Y rear-wheel drive (2024)

$7,500

$80,000

Volkswagen, ID.4 AWD Pro, Pro S, Pro S Plus

(2023-2024)

$7,500

$80,000

ID.4 Pro, Pro S, Pro S Plus

(2023-2024)

$7,500

$80,000

ID.4 S, standard

(2023-2024)

$7,500

$80,000

*Source: fueleconomy.gov; data accurate as of 2/2/24.

The 2023 Ford F-150 Lightning EV will be offered for sale at Golf Mill Ford in Niles, IL on July 18, 2023. The 2023 Ford F-150 Lightning EV will be offered for sale at Golf Mill Ford in Niles, IL on July 18, 2023.

The 2023 Ford F-150 Lightning EV will be offered for sale at Golf Mill Ford in Niles, IL on July 18, 2023. Currently, 2022, 2023, and 2024 Ford F-150 Lightning EVs are eligible for federal tax credits.

Scott Olson/Getty Images

2024 EV Tax Credit Requirements

So why aren't all EVs tax deductible?

The idea behind these requirements is twofold. One is to ensure credit is available to those who need it, and the other is to encourage domestic electric vehicle manufacturing.

“It's going to be an exciting time,” Glenn said. “Everyone is competing to achieve this higher goal that we have…and the result is more green jobs.”

“The long-term vision and the end result will be very positive,” Glenn said, referring to the potential growth of “green” auto jobs in the United States.

Manufacturer's suggested retail price

The tax credit has two caps on the MSRP (essentially the car's sticker price). The limit is $80,000 for vans, sport utility vehicles, and pickup trucks and $55,000 for all other EVs. To claim the tax credit, the total value of your vehicle must be below these thresholds.

Critical minerals and battery components

This is where the requirements get tricky. To qualify for the full credit, at least 40% of the “critical minerals” in EV batteries must be extracted or processed in the United States or a country with a free trade agreement with the United States. Additionally, at least 50% of an EV's battery components must be manufactured or assembled in the United States or a country with a free trade agreement with the United States.

income limit

This credit is only available to people whose “adjusted gross income” is less than a certain amount. For married couples, the limit is $300,000 per year. For the head of household, the limit is $225,000. For everyone else, the limit is an annual income of $150,000.

Assembly location

EVs eligible for federal discounts must undergo “final assembly” in North America (U.S., Mexico, or Canada).

Why some EVs only receive partial tax credits instead of full tax credits

The federal tax credit is not a simple on/off switch. Some vehicles that do not qualify for the full $7,500 credit may still be eligible for a partial credit.

This goes back to battery procurement rules. Vehicles that meet one of these procurement requirements, but not both, are eligible for a partial credit of $3,750. Again, the best way to find out how this applies to your particular vehicle is to check the government's list.

How to claim the EV tax credit in 2024

Dealers can now offer tax credits as discounts off the sticker price, so there aren't as many steps for customers to take after purchasing a car.

If you want to take advantage of the 2024 EV tax credit, here's what you need to know before you buy.

  • Not all dealers offer upfront instant tax credits. Always inquire before you buy, Whitefoot advises.

  • According to Fueleconomy.gov, the government's official fuel economy information source, car dealers must verify that a particular EV model qualifies for the tax credit and are responsible for providing an IRS point-of-sale report.

  • The dealer won't check your income, so double check that your income is below the limit. “There are some terms and conditions. The dealer will give you this, but it's really up to the customer to understand the income,” Glenn said. Otherwise, the IRS may revoke the tax credit if the customer exceeds the income limit.

  • Don't forget about state-level EV rebates. This can be added to your federal credit. Contact your state energy department for more information.



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