Just 16 Electric Vehicles Eligible for Federal Tax Credits: Which Ones Qualify?
The vast majority of all-electric vehicle (EV) models will not be eligible for tax credits of up to $7,500, according to federal rules that come into effect on April 18, which could have a dampening impact on potential car buyers looking to go electric. Only 16 EVs from four brands are eligible for tax credits if the vehicles are taken delivery by taxpayers on or after April 18, 2023, according to data from fueleconomy.gov, a website run by the Department of Energy (DoE). New rules set by the Department of the Treasury and per the provisions of the Inflation Reduction Act (IRA) mean that most of the 40 EVs that are available in the United States won’t be eligible for tax credits. Many of the vehicles that do not qualify for credits are manufactured outside of North America, which disqualifies them automatically. At least 40 percent of the value of battery minerals should be mined, processed, or recycled in the United States or in nations with which America has trade deals. This requirement jumps 10 percent each year until it hits 80 percent in 2027. At least 50 percent of the value of battery parts should be assembled or manufactured in North America. This number jumps to 60 percent in 2024 and 2025. In the subsequent years, the number rises by 10 percent each year until it hits 100 percent in 2029. Meanwhile, companies are setting up battery and assembly plants in the region in hopes of getting their vehicles eligible for the benefits. Electric vehicle models of four brands qualify for tax credits: Tesla, Ford, Chevrolet, and Cadillac. Tesla’s Model 3 Performance, Model Y All-Wheel Drive, Model Y Long Range All-Wheel Drive, and Model Y Performance are qualified for a tax credit of $7,500, while Tesla Model 3 Standard Range Rear Wheel Drive only gets a tax credit of $3,750. Ford’s F-150 Lightning Extended Range Battery and F-150 Lightning Standard Range Battery both get $7,500 in credits. The company’s three other models in the list—E-Transit, Mustang Mach-E Extended Range Battery, and Mustang Mach-E Standard Range Battery—each get a $3,750 tax credit. Five EV models from Chevrolet are eligible for $7,500 in credits: Blazer, Bolt, Bolt EUV, Equinox, and Silverado. Cadillac’s LYRIQ is eligible for a credit of $7,500 as well. All 16 models are assembled in America, with their model years ranging from 2022 to 2024. If the taxpayer has taken delivery of the EV model between Dec. 31, 2022, and April 18, 2023, a few more models from brands including Rivian, Nissan, Genesis, and Volkswagen are eligible for tax credits. Qualifying Criteria The tax credits are available to both individuals and businesses, and to qualify, the EV must be purchased for own use, not for resale. The vehicles should also primarily be used in the United States. For individuals, the tax credit comes with an income limit. The modified adjusted gross income should not exceed $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers. The vehicle should be new, meaning that it hasn’t been previously purchased, registered, titled, or used for any purpose. The EV needs to have a battery capacity of minimum 7-kilowatt hours and a gross vehicle weight of less than 14,000 pounds. In addition, the manufacturer’s suggested retail price (MSRP) for EV vans, sport utility vehicles, and pickups cannot exceed $80,000. For other EV vehicles, the MSRP cannot exceed $55,000. To claim credits, an individual must file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with their tax return. Blocking Benefits to Chinese Firms Meanwhile, Sen. Marco Rubio (R-Fla.) introduced a bill last month seeking to block U.S. subsidies to Chinese battery firms. In a press release on March 9, Rubio pointed out that 76 percent of the world’s electric battery production comes from manufacturers that are controlled or supported by the Chinese Communist Party. The bill, called “Restricting Electric Vehicle Outlays from Kleptomaniac Enemies (REVOKE) Act of 2023,” seeks to “significantly restrict the eligibility of IRA tax credits and prevent Chinese companies from benefiting.” “Hard-working Americans should not be forced to subsidize Chinese companies that make batteries for electric vehicles that cost more than most people make in a year,” Rubio said.
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The vast majority of all-electric vehicle (EV) models will not be eligible for tax credits of up to $7,500, according to federal rules that come into effect on April 18, which could have a dampening impact on potential car buyers looking to go electric.
Only 16 EVs from four brands are eligible for tax credits if the vehicles are taken delivery by taxpayers on or after April 18, 2023, according to data from fueleconomy.gov, a website run by the Department of Energy (DoE). New rules set by the Department of the Treasury and per the provisions of the Inflation Reduction Act (IRA) mean that most of the 40 EVs that are available in the United States won’t be eligible for tax credits.
Many of the vehicles that do not qualify for credits are manufactured outside of North America, which disqualifies them automatically.
At least 40 percent of the value of battery minerals should be mined, processed, or recycled in the United States or in nations with which America has trade deals. This requirement jumps 10 percent each year until it hits 80 percent in 2027.
At least 50 percent of the value of battery parts should be assembled or manufactured in North America. This number jumps to 60 percent in 2024 and 2025. In the subsequent years, the number rises by 10 percent each year until it hits 100 percent in 2029.
Meanwhile, companies are setting up battery and assembly plants in the region in hopes of getting their vehicles eligible for the benefits.
Electric vehicle models of four brands qualify for tax credits: Tesla, Ford, Chevrolet, and Cadillac.
Tesla’s Model 3 Performance, Model Y All-Wheel Drive, Model Y Long Range All-Wheel Drive, and Model Y Performance are qualified for a tax credit of $7,500, while Tesla Model 3 Standard Range Rear Wheel Drive only gets a tax credit of $3,750.
Ford’s F-150 Lightning Extended Range Battery and F-150 Lightning Standard Range Battery both get $7,500 in credits. The company’s three other models in the list—E-Transit, Mustang Mach-E Extended Range Battery, and Mustang Mach-E Standard Range Battery—each get a $3,750 tax credit.
Five EV models from Chevrolet are eligible for $7,500 in credits: Blazer, Bolt, Bolt EUV, Equinox, and Silverado. Cadillac’s LYRIQ is eligible for a credit of $7,500 as well. All 16 models are assembled in America, with their model years ranging from 2022 to 2024.
If the taxpayer has taken delivery of the EV model between Dec. 31, 2022, and April 18, 2023, a few more models from brands including Rivian, Nissan, Genesis, and Volkswagen are eligible for tax credits.
Qualifying Criteria
The tax credits are available to both individuals and businesses, and to qualify, the EV must be purchased for own use, not for resale. The vehicles should also primarily be used in the United States.
For individuals, the tax credit comes with an income limit. The modified adjusted gross income should not exceed $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers.
The vehicle should be new, meaning that it hasn’t been previously purchased, registered, titled, or used for any purpose. The EV needs to have a battery capacity of minimum 7-kilowatt hours and a gross vehicle weight of less than 14,000 pounds.
In addition, the manufacturer’s suggested retail price (MSRP) for EV vans, sport utility vehicles, and pickups cannot exceed $80,000. For other EV vehicles, the MSRP cannot exceed $55,000.
To claim credits, an individual must file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with their tax return.
Blocking Benefits to Chinese Firms
Meanwhile, Sen. Marco Rubio (R-Fla.) introduced a bill last month seeking to block U.S. subsidies to Chinese battery firms.
In a press release on March 9, Rubio pointed out that 76 percent of the world’s electric battery production comes from manufacturers that are controlled or supported by the Chinese Communist Party.
The bill, called “Restricting Electric Vehicle Outlays from Kleptomaniac Enemies (REVOKE) Act of 2023,” seeks to “significantly restrict the eligibility of IRA tax credits and prevent Chinese companies from benefiting.”
“Hard-working Americans should not be forced to subsidize Chinese companies that make batteries for electric vehicles that cost more than most people make in a year,” Rubio said.
