$7,500 in Your Pocket: A Guide to the Federal Tax Credit for Electric Vehicles

Can I Get a Federal Tax Credit for My New Electric Vehicle?

What You Need to Know About the Inflation Reduction Act and EV Tax Credits

As electric vehicle (EV) sales grow in 2024 many buyers want to know if they can get a federal tax credit. The Inflation Reduction Act of 2022 extended this credit potentially giving up to $7,500 for new EVs or fuel cell vehicles bought between 2023 and 2032. However, this credit depends on factors like how much tax you owe and the details of the vehicle such as where it’s made and the materials used in its battery, according to the report of elektrek.

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(photo: METALCON 2024)

Understanding the New Federal Tax Credit Requirements

To get the full $7,500 credit, the EV must be made in North America and meet certain battery requirements. The credit is split into two parts $3,750 if 50% of the battery’s critical minerals come from North America or trade agreement countries and another $3,750 if 50% of the battery’s components are from these regions. These requirements will get tougher over the years, with higher percentages needed. Starting in 2025 vehicles with battery materials from certain foreign countries will not qualify for the credit.

For used EVs, the tax credit has been updated to offer up to $4,000 for vehicles costing less than $25,000, but there are conditions like income limits and the vehicle’s age. Besides federal credits and there may be state-specific incentives that vary. Buyers should check their eligibility and look at updated lists of qualifying vehicles to make the best purchase decisions.

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