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How Do Electric Car Tax Credits Work in 2024? – Kelley Blue Book

Quick Facts About Federal Incentives for Electric Cars

  • Starting Jan. 1, 2024, stricter rules take effect that will limit EVs eligible for federal tax credits.
  • For EVs that qualify, consumers can instantly obtain tax credits of up to $7,500 off qualifying new vehicles and $4,000 off used vehicles. Those credits can be used as car down payments.
  • The list of eligible electric vehicles is not yet published. However, it’s slated to be a smaller number in 2024 due to battery and parts requirements.
  • Income caps on the electric car tax credit eligibility still apply.

Consumers considering a new electric vehicle or plug-in hybrid might want to act fast. With incentives potentially running out on Jan. 1, 2024, car shoppers should weigh how tax credits work and how they could affect any upcoming buying decisions.

Read on to find out if federal tax incentives will help you defray the cost of buying a zero-emission vehicle when combined with state and local rebates.

How the New EV Tax Credits Work

Types of EVs.
Types of EVs.

According to Kelley Blue Book research, electric car buyers spent $52,345 on average for a new EV purchase in November, down more than $10,000 since a year ago. The industry-wide average that includes gas-powered vehicles and electric cars reached $48,247 in the same time frame.

Here’s how the electric vehicle tax credits work in 2023 and 2024 (as of this writing):

IRS Tax Filing Status Adjusted Gross Income Limits
Single $150,000
Head of household $225,000
Married and filing jointly $300,000
Married and filing separately $150,000
  • Used electric vehicle rebate. Anyone considering a used electric car under $25,000 could obtain up to a $4,000 tax credit, subject to income and other limits. To qualify, used cars must be at least two model years old. The vehicle also must be purchased at a dealership. The vehicle also only qualifies once in its lifetime. Purchasers of used vehicles can only qualify for one credit every three years, and to qualify, individuals must meet income requirements (see below). The credit ends in 2032.
IRS Tax Filing Status Adjusted Gross Income Limits
Single $75,000
Head of household $112,500
Married and filing jointly $150,000
Married and filing separately $75,000

List of 2023-2024 Electric Vehicles That Qualify 

The U.S. Internal Revenue Service has yet to release its newest list. So far, we know the following updates to the tax credits for Jan. 1, 2024.

Once the IRS publishes its new list of qualifying vehicles, we will update ours.  

Here’s the list of vehicle that qualify on or after April 18, 2023 to Dec. 31, 2023. The list constantly changes as car manufacturers open assembly plants in the U.S. to meet the new requirements.

Vehicle Credit Amount MSRP Limit
2024 BMW xDrive50e PHEV $3,750 $80,000
2023-2024 Cadillac Lyriq $7,500 $80,000
2024 Chevrolet Blazer EV $7,500 $80,000
2023 Chevy Bolt EV $7,500 $55,000
2023 Chevy Bolt EUV $7,500 $55,000
2024 Chevy Equinox EV $7,500 $80,000
2024 Chevy Silverado EV $7,500 $80,000
2023-2024 Chrysler Pacifica PHEV $7,500 $80,000
2023 Ford E-Transit $3,750 $80,000
2023 Ford Escape PHEV $3,750 $80,000
2023 Ford F-150 Lightning $7,500 $80,000
2023 Ford Mustang Mach-E $3,750 $80,000
2023-2024 Jeep Grand Cherokee 4xe PHEV $3,750 $80,000
2023-2024 Jeep Wrangler 4xe PHEV $3,750 $80,000
2023 Lincoln Aviator Grand Touring $7,500 $80,000
2023 Lincoln Corsair Grand Touring $3,750 $80,000
2024 Nissan Leaf S $3,750 $55,000
2024 Nissan Leaf SV Plus $3,750 $55,000
2023 Rivian R1S $3,750 $80,000
2023 Rivian R1T $3,750 $80,000
2023 Tesla Model 3 Standard Range RWD $7,500 $55,000
2023 Tesla Model 3 Performance $7,500 $55,000
2023 Tesla Model 3 Long Range AWD $7,500 $55,000
2023 Tesla Model X Long Range $7,500 $80,000
2023 Tesla Model Y AWD  $7,500 $80,000
2023 Tesla Model Y Long Range AWD $7,500 $80,000
2023 Tesla Model Y Performance $7,500 $80,000
2023 Tesla Model Y RWD $7,500 $80,000
2023 Volkswagen ID.4 $7,500 $80,000

UPDATE: Recent Tesla price cuts on the base Model S may allow those vehicles to qualify for government tax credits. According to Tesla’s website, some buyers can qualify for the full $7,500 EV tax credit on the base Model S, which is priced at $74,990 now, down from $104,990 on Jan. 1. The government’s list of qualifying vehicles does not yet list the Model S among qualifying cars.

This is the list of electric and plug-in hybrid vehicles that qualify for tax credits if placed in service between Jan. 1, 2023, and April 17, 2023.

Vehicle Credit Amount MSRP Limit
2023 Audi Q5 TFSI e Quattro PHEV $7,500 $80,000
2021-2023 BMW 330e PHEV $5,836* $55,000
2021-2023 BMW X5 eDrive 45e PHEV $7,500 $80,000
2022-2024 Cadillac Lyriq $7,500 $80,000
2022-2023 Chevy Bolt EV $7,500 $55,000
2022-2023 Chevy Bolt EUV $7,500 $55,000
2024 Chevy Silverado EV $7,500 $80,000
2022-2023 Chrysler Pacifica PHEV $7,500 $80,000
2022-2023 Ford E-Transit $7,500 $80,000
2022 Ford Escape PHEV $6,843 $80,000
2023 Ford Escape PHEV $6,885 $80,000
2022-2023 Ford F-150 Lightning $7,500 $80,000
2022-2023 Ford Mustang Mach-E $7,500 $80,000
2023-2024 Genesis Electrified GV70 $7,500 $80,000
2022-2023 Jeep Grand Cherokee 4xe PHEV $7,500 $80,000
2022-2023 Jeep Wrangler 4xe PHEV $7,500 $80,000
2022-2023 Lincoln Aviator Grand Touring PHEV $6,534 $80,000
2022 Lincoln Corsair Grand Touring PHEV $6,843 $80,000
2023 Lincoln Corsair Grand Touring PHEV $6,885 $80,000
2023 Mercedes-Benz EQE $7,500 $80,000
2021-2023 Nissan Leaf S $7,500 $55,000
2021-2022 Nissan Leaf S Plus $7,500 $55,000
2021-2022 Nissan Leaf SL Plus $7,500 $55,000
2021-2022 Nissan Leaf SV $7,500 $55,000
2021-2023 Nissan Leaf SV Plus $7,500 $55,000
2022-2023 Rivian R1S $7,500 $80,000
2022-2023 Rivian R1T $7,500 $80,000
2022-2023 Tesla Model 3 Long Range $7,500 $55,000
2022-2023 Tesla Model 3 Performance $7,500 $55,000
2022-2023 Tesla Model 3 RWD $7,500 $55,000
2022-2023 Tesla Model Y AWD $7,500 $80,000
2022-2023 Tesla Model Y Long Range $7,500 $80,000
2022-2023 Tesla Model Y Performance $7,500 $80,000
2023 Volkswagen ID.4 $7,500 $80,000
2022 Volvo S60 PHEV $5,419 $55,000
2022 Volvo S60 Extended Range PHEV $7,500 $55,000
2023 Volvo S60 T8 Recharge Extended Range PHEV $7,500 $55,000

*Check VIN to know if assembled in North America.

State and Local Incentives Near You

Though the federal government’s effort makes up the lion’s share of government EV discounts, some states and local governments offer incentive programs to help new car buyers afford something more efficient. These can be tax credits, rebates, reduced vehicle taxes, single-occupant carpool-lane access stickers, and registration or inspection fee exemptions.

States like California and Connecticut offer broad support for electric vehicle buyers. However, Idaho and Kentucky are among the states offering no support to individual EV buyers.

Your Electric Utility May Help

Lastly, it’s not just governments that can help you with the cost of a new EV. Some local electric utilities provide incentive programs to help buyers get into electric vehicles. After all, they’re among the ones that benefit when you turn your fuel dollars into electricity dollars.

Some offer rebates on cars. Others offer discounts on chargers or install them for free when you sign up for off-peak charging programs.

For example, Rhode Island offers up to $1,500 to residents who purchase or lease a qualified new battery electric vehicle. The state also rebates up to $1,500 more to purchasers who qualify based on income eligibility.

Electric Car Guides:

Editor’s Note: This article has been updated for accuracy since it was originally published.

This article was originally published by a
www.kbb.com . Read the Original article here. .

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