To mitigate the strain of the current economic climate, the Biden Administration has recently introduced an electric car tax credit. This tax credit joins the Inflation Reduction Act’s green home energy credits, which offer tax credits to those who make or install eco-friendly home improvements.
The Clean Vehicle Credit creates a tax credit up to $7,500 for new vehicles and up to $4,000 for a used one. The availability of these credits is subject to limitations based on such factors as the taxpayers’ modified adjusted gross income, the cost of the vehicle and where it was manufactured.
Here’s a detailed overview of qualifying details, tax credit details, and additional incentives for owning an electric vehicle.
Qualifications
To qualify for the tax credit, there are price and income restrictions. For new sedans, the manufacturer’s suggested retail price (MSRP) needs to be below $55,000 to be eligible for the tax credit. For SUVs, trucks, and vans, that price cap is $80,000. The credit is unavailable to single tax filers with modified adjusted gross income above $150,000. For married couples filing jointly, that income limit would be $300,000, and for individuals who file as head of household, $225,000.
For used clean vehicles, the buyers’ MAGI must be under $150,000 on joint returns, $112,500 for heads of household, and $75,000 for single taxpayers. The sales price for the used vehicle must be $25,000 or less. The used clean vehicle credit applies to vehicles acquired after Dec. 31, 2022.
Qualifying Vehicles (Makes and Models)
Since the credit was designed to encourage domestic production in North America, the vehicle must have final assembly occur in North America. The latest makes and models that could qualify, starting in January of 2023, include:
Electric Vehicles
- Cadillac Lyriq (2023)
- Chevrolet Bolt EUV (2022)
- Chevrolet Bolt EV (2022-2023)
- Ford F-150 Lightning (2022)
- Ford Mustang Mach-E (2022)
- Ford E-Transit (2022)
- Nissan Leaf (2022-2023)
- Rivian EDV 700 (2022)
- R1T (2022) (Dual Motor Adventure only)
- R1S (2022) (Dual Motor Adventure only)
- Tesla Model 3 (2022)
- Tesla Model Y (2022).
Plug-In Hybrid Electric Vehicles
- Audi Q5 (2022)
- BMW 330E (2022-2023)
- BMW X5 xDrive45e (2022)
- Chrysler Pacifica Plug-In Hybrid (2022)
- Ford Escape Plug-In Hybrid (2022)
- Jeep Grand Cherokee PHEV (2022)
- Jeep Wrangler Unlimited PHEV (2022)
- Lincoln Aviator PHEV (2022)
- Lincoln Corsair Plug-In Hybrid (2022)
- Volvo S60 (2022).
An exhaustive list of vehicles that qualified for the previous tax credit can be found here. Though the new models listed above are the new credit’s main focus, older electric cars acquired from 2010 to 2021 may qualify once more in the future.
Additional Incentives
In addition to the federal credit, electric vehicle owners may also qualify for a state tax incentive. California is one such example, where drivers are eligible for a $4,500 rebate or a $5,000 grant under the Clean Vehicle Assistance Program. It’s advised that all electric car owners check their state regulations for additional credits they can leverage.
Navigate here for more information about the Inflation Reduction Act and its tax credit offerings and contact Proseer to see if you qualify.
