A number of EVs are eligible for the federal government's tax credit program, which can reduce what you owe the IRS by up to $7500 for a single tax year.
In 2010, the federal government implemented a program that offered up to $7500 in tax credits to buyers of electric vehicles. The purpose of the program was to incentivize people to buy more fuel-efficient vehicles by artificially bringing down the prices of EVs closer to those of internal combustion vehicles.
The number of credits, or tax incentives, an EV can qualify for depends on the capacity of its battery pack. If a battery-electric or plug-in hybrid vehicle has a battery with a capacity of less than 7.0 kWh, then it does not qualify for any EV tax credits. Vehicles can qualify for up to $7500 in tax credits, and all HFCVs are eligible for the full amount.The IRA introduces a number of changes to federal EV tax credit laws.
Single and separate tax filers are capped at $150,000, those who file as a head of household are capped at $225,000, and joint filers and surviving spouses are capped at $300,000. These figures are halved for individuals looking to claim the $4000 tax credit for a used EV, PHEV, or HFCV. The battery packs of vehicles put into service before January 1, 2024, will need at least 40 percent of their mineral materials to be sourced in this manner. Later in 2024, this figure rises to 50 percent, with each subsequent year adding an additional 10 percent to this equation, ultimately topping out at 80 percent for vehicles placed in service after December 31, 2026, to qualify for the EV tax credit.
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