The Federal EV Tax Credit For 2024 and Other EV Incentives
INCLUDING Finding vehicles that qualify for the EV credit, EV tax credit income limits and how to find other EV incentives such as the Affordable Fuel Vehicle Refueling Property Credit
Since 2008, the federal tax credit of up to $7,500 for new EVs has already helped many people afford EVs. In 2024, it was expanded to include used EVs and now can be gotten at the time of purchase. Starting in 2023, a credit for helping install EV charging also became available.
While only certain vehicles and purchasers can qualify, if you are thinking about buying an EV, the federal tax credit as well as other state and city incentives can offer a huge incentive.
Electric cars are already less expensive to operate thanks to low maintenance costs and lower fueling costs. The total cost of ownership rivals that of gasoline cars even without a tax credit – but can be even more competitive with it.
Read below to learn more about the federal tax credit for electric cars and other EV incentives in the US.
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The Federal Electric Car Credit in 2024 Overview
Beginning in 2024, eligible buyers of eligible EVs or plug-in hybrids can receive the tax credit at the time of purchase as an “on the hood” discount.
There's no longer a need to wait to take the credit at the time of tax filing.
On top of this, in 2024 taxpayers who don’t owe enough tax to be offset by the credit will still be eligible for the full $7,500 credit.
There’s also a new federal tax credit for USED EVs priced up to $25,000. The discount is up to $4,000 or 30% of vehicle cost, whichever is lower.
The Clean Vehicle Tax Credits must be initiated and approved at the time of sale and the vehicles must be purchased for use in the US.
You can check with the dealer that the IRS’s confirmation that a “time-of-sale” report was submitted successfully by the dealer.
Your home or business could also be eligible for tax credits that could save up to 30% off the cost of installing EV charging infrastructure.
Prior to 2024, the federal IRS tax credit was just for new EVs and given to people who had a tax bill at the end of the year for at least that amount.
You can find out about the tax benefit specific each electric vehicle on the DOE website.
Combined with state and local incentives, your savings could be huge!
Looking to Save Money on an EV?
Our nonprofit has collected some of the best resources on purchasing or leasing an EV in 2024 and put them into an easy-to-use cheat sheet.
It's a must read for people considering an EV in 2024.
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EV Tax Credit Income Limits
There are income limits set on what taxpayers make to qualify.
For New EVs: Single and married filing separately: $150,000; Head of household: $225,000; Married filing jointly: $300,000.For Used EVs: Single and married filing separately: $75,000; Head of household: $112,500; Married filing jointly: $150,000.
Keep in mind that this is your modified adjusted gross income (found on Line 11 of Form 1040). There are several strategies that can be used to lower your income throughout the year, including maxing out a 401(k).
Also, according to the IRS can also use your income from either the year the car is delivered, or the year before delivery if one is lower than the other.
Finally, you still might be able to get a better deal on the lease even if your income is above the level. The dealer could receive the credit, not you leasing the vehicle, and could pass those savings on you. In this case, make sure you get an itemized bill to check that they do.
Is Your Vehicle Eligible For The EV Tax Credit
Vehicle eligibility for the federal EV tax credit differs depending on the time it was purchased.
For example, in 2024 there is a price cap. Vans, SUVs and pickup trucks must have an MSRP of $80,000 or less to qualify; sedans and passenger cars are capped at $55,000; used vehicles have a price cap of $25,000. This is based on MSRP and not the final sale price - a heavily discounted luxury EV would not quality.
There are other vehicle requirements, including that it must have been assembled in North America.
However, in 2024 there’s no longer a 200,000 vehicle sales cap on tax credits that made more popular EVs, such as those from Tesla, GM, and Toyota ineligible.
Vehicle eligibility for the federal electric vehicle tax credit can be easily checked on fuelconomy.gov.
You can select the time of purchase:
And add the make, model and year
How to Claim the EV Tax Credit
If you purchased your EV before January 1, 2024, you might be eligible for a tax credit. You can file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your tax return.
Check this page for more details.
Any vehicles purchases after January 1st, 2024 will have the eligibility and amount determined at the time of sale. The IRS Energy Credits Online website can be used with your dealer.
Note that if you ordered a vehicle in 2023 but it's delivered in 2024, the new rules apply.
Alternative Fuel Vehicle Refueling Property Credit
There is another U.S. Federal Tax Credit that gives individuals 30% off home charging stations. It also can help with installation costs up to $1,000.
To qualify, you must purchase and install the charging station by December 31, 2032, as well as claim the credit on your federal tax return.
Download the Ultimate EV Home Charging Cheat Sheet
We put together this free cheat sheet to help people learn about EV charging and how to purchase the right home charger. Simply enter your email to access the cheat sheet as well as sign up for other EV news and inspiration delivered straight to your inbox.
The EV Home Charging Cheat Sheet is brought to you completely free of charge by Coltura, an award-winning nonprofit.
How To Find State And Local EV Incentives
To find the incentives in your state, visit PlugStar or Energy.gov.
Our nonprofit also put together the free EV incentive checklist to help people learn about the many ways they can save money on EVs.
If you are based in California, you can check out this page for EV incentives for Californians.
Once you find the incentives on one of these directories, you should check directly on your state/city government page as these incentives do change.
You may also find you can qualify for special loans, low-cost charging rates, registration fee reductions or other benefits. Many states have offers for businesses and nonprofits as well. It’s definitely worth a look at the above sites.
EVs Are Affordable With Or Without The Tax Credit
Whether or not you qualify for tax credits should not be a make or break reason to get an EV. Many EVs already cost less than equivalent gas cars over their lifetimes because of cheaper fuel and less maintenance. You can even find free EV charging stations near you.
Check out the least expensive EVs here.
The Current Tax Credit May Not Last Forever
Rules for the EV credit have changed. If you’ve been thinking about buying an electric vehicle, there’s no time like the present.
The Federal EV Tax Credits & Incentives Conclusion
Before purchasing or leasing an electric vehicle, check your eligibility for federal, state, and local tax credits and other incentives. This article is not financial advice. We hope the resources above can help you understand and find electric vehicle tax credits and other incentives.
We appreciate your consideration of an EV. You’re keeping our air cleaner by driving and EV and benefiting other Americans. You deserve to take advantage of these incentives and feel great about driving your EV.
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