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Guide to the EV Tax Credit

Guide to the EV Tax Credit

We all want to save on our taxes, and what better way than by helping out the planet? With the expanded federal EV tax credit created by the Inflation Reduction Act, you may be eligible for a significant amount just for buying an EV. Let's take a look at what an electric vehicle tax credit is, the different types of credits, and what vehicles may qualify for this tax break.

What is an Electric Vehicle Tax Credit?

EV tax credits are government incentives created to encourage the use of electric vehicles. Based on the type of credit, a certain amount of money is discounted from the taxes an EV owner owes. The 2022 Inflation Reduction Act changed the Qualified Plug-in Electric Drive Motor Vehicle Credit in the United States. The tax credit, known now as the Clean Vehicle Credit, requires that the final assembly for a purchased EV be in North America (as of August 17th, 2022).

Different Electric Vehicle Tax Credit Types

There are a few distinctions in when these vehicles were purchased when it comes to qualification:

  • Vehicles Purchased Before August 17th, 2022: If you bought a qualifying EV before August 17th, 2022, you might be eligible for a tax credit of between $2,500 and $7,500. What level of tax credit you qualify for depends on your vehicle's gross weight rating and its traction battery capacity. This credit works for vehicles without final assembly in North America, but only if your purchase occurred before the August deadline.
  • Vehicles Purchased Between August 17th and December 31st, 2022: EVs bought between August 16th and December 31st of 2022 are also eligible for a tax credit, but only if the vehicles had their final assembly in North America and the manufacturer is below the sales cap. You can find information about a specific vehicle's build location with its VIN number.
  • Vehicles Purchased After December 31st, 2022: After the last day of 2022, all manufacturer sales caps will be removed, and the scope of eligible vehicles will expand. Starting January 1st, 2023, all EVs and FCEVs as long as they have a traction battery with at least seven kilowatt-hours. There will also be requirements relating to a vehicle's consideration regarding its battery mineral sourcing; these criteria will be based on the following:
    • Extraction
    • Processing
    • Recycling
    • Battery component manufacturing
    • Battery component assembly

Vehicles that meet government criteria will be eligible for up to $7,500 in tax credits.

What Electric Vehicles Are Assembled in North America?

What Electric Vehicles Are Assembled in North America?

A variety of vehicle manufacturers have final assembly in North America, but only for certain brands and model years. You can find more information about your car's specifications by

getting a vehicle history report, but to help you determine where your recent EV purchase was assembled, consult the list below. You'll also want to check whether these manufacturers have met their sales cap by looking online or contacting a company representative.

Electric Vehicles Assembled in North America [2022]

  • Tesla Model 3
  • Tesla Model X
  • Tesla Model S
  • Tesla Model Y
  • Chevrolet Bolt EUV
  • Chevrolet Bolt EV
  • Chrysler Pacifica PHEV
  • Audi Q5
  • BMW 330e
  • BMW X5 (PHEV)
  • Ford Escape PHEV
  • Ford-ETransit
  • Ford F-150 Lightning
  • Ford Mustang Mach E
  • GMC Hummer EV Pickup
  • GMC Hummer EV SUV
  • Jeep Wrangler
  • Lucid Air
  • Rivian R1S
  • Rivian R1T
  • Rivian EDV
  • Nissan Leaf
  • Lincoln Aviator PHEV
  • Lincoln Corsair PHEV
  • Volvo S60 Recharge
  • BMW 330e
  • Jeep Grand Cherokee

Electric Vehicles Assembled in North America [2023]

  • Nissan Leaf
  • BMW 330e
  • BMW X5 (PHEV)
  • Mercedes EQS SUV
  • Lincoln Aviator PHEV
  • Cadillac Lyriq
  • Chevrolet Bolt EV
  • Jeep Grand Cherokee 4xe
  • Jeep Wrangler 4xe

EV Tax Credit Frequently Asked Questions

Can I Still Get the EV Tax Credit in 2022?

Yes, you can get an EV tax credit in 2022, though the exact credit you will receive depends on when your car was put in service and where its final assembly took place (refer to the section above.) In addition, the tax credit has been extended until December of 2032, so any EVs placed in service after December 31st, 2022, will get a credit based on verbiage included in the Inflation Reduction Act.

How Do I Claim an Electric Vehicle Tax Credit?

To claim your EV tax credit, you'll need to fill out IRS Form 8936. This form is designed to help qualifying taxpayers to claim their EV tax credit; it can be downloaded from the IRS website, after which it needs to be printed and filled out in full. Check whether your vehicle is eligible for the electric vehicle tax credit by consulting a vehicle manufacturer representative or the IRS.

How Much Tax Credit Do You Get for Electric Vehicles?

The exact amount of tax credit you receive will depend on the type of vehicle you purchased, the manufacturer who created the car, and when it was put in service. If your vehicle qualifies, you may be eligible for up to $7,500 in credits. This tax credit is nonrefundable, so the vehicle buyer must have a federal tax liability. You can't get full or partial benefits without a federal tax liability. This means that if you don't owe federal taxes, you aren't eligible to receive money. For example, if you owed $5,000 in taxes and qualified for the EV tax credit, you would not get the full $7500 (only $5000.) This amount does not carry over to taxes applicable to the following year either, only during the year you purchased your electric vehicle.

Does Tesla Get Federal Tax Credit?

Certain models of Tesla are eligible for the Electric Vehicle Tax Credit, depending on when they were manufactured and where their final assembly took place. Check the Tesla official website or contact a representative to see if your vehicle purchase qualifies for this credit. In addition, if you're interested in used Teslas or other EVs, you can get more information through a vehicle history report. These reports can help you find essential details about any available car, making it easier to get better prices and avoid common car-buying scams.