EV Tax Credit

Extracted Attributes

• Type

  Tax Credit

• Purpose

  Encourage Electric Vehicle (EV) Adoption

• Legislative Basis

  Inflation Reduction Act of 2022

• Administering Body

  Internal Revenue Service (IRS)

• Vehicle Weight Limit

  Less than 14,000 pounds

• Transferability Option

  Can be transferred to eligible dealer for immediate discount (from 2024)

• Maximum Credit (New EV)

  $7,500

• Maximum Credit (Used EV)

  $4,000

• Vehicle Type Eligibility

  Plug-in electric or fuel cell vehicles

• New EV Eligibility - Assembly

  Must be assembled in North America

• Used EV Eligibility - Transfer Limit

  Only qualifies for the first transfer of a vehicle

• Battery Capacity Requirement (New EV)

  At least 5 kilowatt-hours (kWh)

• Used EV Eligibility - Age Requirement

  At least two years old

• Battery Capacity Requirement (Used EV)

  At least 7 kilowatt-hours (kWh)

• Used EV Eligibility - Purchase Price Cap

  $25,000

• Used EV Eligibility - Claim Frequency Limit

  Once every three years

• New EV Eligibility - Battery Components Sourcing

  Specific percentage of battery components sourced from U.S. or free-trade agreement countries

• Hypothetical Legislative Impact (Big Beautiful Bill)

  Elimination of EV Tax Credit and solar energy subsidies

• New EV Eligibility - Income Threshold (Joint Filers)

  $300,000 Modified AGI

• New EV Eligibility - Critical Battery Minerals Sourcing

  Specific percentage of critical battery minerals sourced from U.S. or free-trade agreement countries

• New EV Eligibility - Income Threshold (All Other Filers)

  $150,000 Modified AGI

• New EV Eligibility - Income Threshold (Head-of-Household Filers)

  $225,000 Modified AGI

Timeline

• The Inflation Reduction Act of 2022, which includes the current framework for the EV Tax Credit, was signed into law by President Joe Biden. (Source: Wikipedia)

  2022-08-16

• Qualifying EVs purchased before this date were eligible for a tax credit under previous rules. (Source: afdc.energy.gov)

  2022-08-16

• The option to transfer the federal EV tax credit to a qualified selling dealer for an immediate discount became available. (Source: edmunds.com)

  2024-01-01

• Federal EV tax credits are set to end. (Source: edmunds.com)

  2025-01-01

Inflation Reduction Act

The Inflation Reduction Act of 2022 (IRA) is a United States federal law which aims to reduce the federal government budget deficit, lower prescription drug prices, and invest in domestic energy production while promoting clean energy. It was passed by the 117th United States Congress and signed into law by President Joe Biden on August 16, 2022. It is a budget reconciliation bill sponsored by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV). The bill was the result of negotiations on the proposed Build Back Better Act, which was reduced and comprehensively reworked from its initial proposal after being opposed by Manchin. It was introduced as an amendment to the Build Back Better Act and the legislative text was substituted. All Democrats in the Senate and House voted for the bill while all voting Republicans voted against it. It was described as a landmark piece of legislation. According to the nonpartisan Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), the law will raise $738 billion from tax reform and prescription drug reform to lower prices, as well as authorize $891 billion in total spending – including $783 billion on energy and climate change, and three years of Affordable Care Act subsidies. It represents the largest investment towards addressing climate change in United States history. According to several independent analyses, the law is projected to reduce 2030 U.S. greenhouse gas emissions to 40% below 2005 levels. It also includes a large expansion of the Internal Revenue Service (IRS), including the hiring of up to 87,000 new employees to replace tens of thousands of recent departures, which led to over $1 billion being collected in past-due taxes from millionaires and other high-wealth individuals by July 2024. The Act is not generally believed to have reduced inflation in 2022 and 2023, although some economists predict it will bring down inflation in the medium-to-long term.

Web Search Results

• EV Tax Credit 2025: How It Works, Eligible Cars - NerdWallet

  ## 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. [...] 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 new electric vehicles (EVs) 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. [...] 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

• Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit

  Qualifying EVs purchased before August 17, 2022, are eligible for a tax credit that is available for the purchase of a new qualified EV that draws propulsion from a battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to charge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500 based on each vehicle’s traction battery [...] requirements are eligible for a total tax credit of $7,500. [...] Additionally, a taxpayer’s eligibility for the tax credit may be limited by thresholds for modified adjusted gross income (modified AGI); only individuals having a modified AGI below the following thresholds for the current tax year or the prior tax year are eligible for the tax credit: $300,000 for joint filers $225,000 for head-of-household filers $150,000 for all other filers

• 2024 & 2025 Federal EV Tax Credit Guide & FAQs

  2024 and After EV Tax Credits The federal government recognizes the critical role an electrified transportation industry must play in combating climate change. Thanks to the Inflation Reduction Act, you can get up to $7,500 tax credit instantly when you buy or lease a new EV. Qualified used EVs may be eligible for up to $4,000 instantly. What are you interested in? I want a new EV I want a used EV I want to lease an EV

• Electric Vehicle Tax Credits set to end in 2025

  To qualify for the full $7,500 federal EV tax credit, the EV you purchase has to be brand-new and assembled in North America. Beyond that, increasingly stringent geographical requirements are being phased in regarding the composition and production of the car's battery pack alongside the vehicle pricing and personal income requirements. Read our full article for the latest details. From 2024 onward, you have the option of transferring your federal EV tax credit to a qualified selling dealer and [...] If you're buying a _new_ EV or PHEV (plug-in hybrid), the "final assembly" of the vehicle must have occurred in North America to unlock any tax credits. If it passes that test, now you're looking at two $3,750 electric car tax credits that add up to $7,500 if you meet all the criteria. To get the first $3,750 credit, a certain percentage of the car's critical battery minerals must have been sourced from the U.S. or from any country that has a free-trade agreement with the U.S. The other $3,750 [...] If the vehicle meets the assembly requirement, you can think of the $7,500 federal EV tax credit as being split into two halves — critical battery minerals and battery components — each worth $3,750 and subject to requirements of its own. We're going to discuss the percentages here, but don't worry about remembering this. The EPA has already calculated the percentages below to determine which cars are eligible and are reflected in our list, so you won't have to figure it out yourself.

• How the EV Tax Credit Works for 2025: Yes, It's Ending Soon

  A federal tax credit for electric vehicles (EVs) is here thanks to the Inflation Reduction Act (IRA), massive legislation promoting clean energy. The credit of up to $7,500 for qualifying EVs, called "clean vehicles," is supposed to encourage EV adoption. However, this tax break, which is also available for some used electric vehicles, is complicated, so there are many questions about how the EV tax credit works. ### Key points [...] Last fall, Mullen Automotive (NASDAQ: MULN) became an IRS “qualified manufacturer” of commercial EVs. The designation means that some of the automaker’s electric vehicles can qualify for the up to $7,500 EV tax credit. Regarding the new designation, John Schwegman, Mullen’s chief commercial officer, acknowledged in a statement that the total cost of ownership is important to commercial customers. [...] And, if you file as head of household and make more than $225,000, you also won’t be able to claim the electric vehicle tax credit. The EV credit income limit is $150,000 for all other filing statuses. Qualifications and income limits for used EVs You must meet the following criteria to qualify for the federal EV tax credit for eligible used/previously owned clean vehicles.